Miss. Wind Pool to Request Up to 400 Percent Rate Increase

Administrators of the Mississippi state wind pool, the insurer of last resort for a growing number of Hurricane Katrina victims, will be requesting a 400 percent increase in its rates, an attorney for the Mississippi Windstorm Underwriting Association says.

The association’s request will be reviewed by the Mississippi Department of Insurance. The increase would mean coastal residents who are part of what is known as the wind pool would see average bills rise from about $800 to $3,200 annually.

“This is not a good thing,” said Greg Copeland, an attorney with Copeland Cook Taylor & Bush, who serves as counsel to the Mississippi Windstorm Underwriting Association.

“A jump to $3,200 wasn’t in anybody’s budget,” Copeland told The Clarion-Ledger’s editorial board on Monday.

The wind pool had 15,252 policyholders when Katrina hit in August. The insured value of those policies was $1.87 billion. After the storm, claims paid by the pool have totaled $603 million, or about one-third of the total insured value.

In 2005, the pool had gross revenue of $13.5 million and paid $8.8 million for $175 million in reinsurance coverage against risks and to help offset losses, such as those occurred with Katrina, Copeland said.

The Legislature created the pool in 1987 to write wind and hail policies in the six south Mississippi counties of Hancock, Jackson, Harrison, George, Stone, and Pearl River. Insurance companies writing homeowner, fire and allied policies own and support the pool.

Once Katrina claims paid by the wind pool reached $175 million, insurance companies doing business in the state were assessed the difference. Copeland said he expects the final assessment will be between $525 million and $535 million.

The assessment is based on the percentage of insurance a company writes statewide, not just policies it writes on the coast.
Insurance Commissioner George Dale said the assessment ultimately will affect all policyholders in the state.

“People who live in Holly Springs who say they aren’t worried about the coast are going to be affected,” Dale said. “Everybody pays something to pay these claims.”

Robert P. Arnold, senior vice president and treasurer of the Mississippi Farm Bureau Mutual Insurance Co., said his company has been assessed $17 million by the pool. Insurance companies likely will seek to recoup that money through rate increases.
Dale hopes this will come over time.

“What we have told the companies that have paid a lot of money is don’t expect to recoup in one year,” Dale said.

Dale said so far about $9 billion, including wind pool and flood insurance claims, has been paid statewide on Katrina.

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