Mississippi Rejects 6 Insurers’ Appeals of Windpool Assessments

Mississippi Insurance Commissioner Mike Chaney has upheld the efforts of the state’s wind insurance pool to collect millions of dollars in past assessments from six insurance companies.

The insurers had claimed that the Mississippi Windpool Underwriting Association was wrong to deny them credits that would have reduced their assessments dating back to 2004.

The insurers affected are Homesite, OneBeacon, RLI, Zurich American, Farmers and Aegis Security.

MWUA is a pool supported by assessments against all property insurers writing in the state. Insurers can receive credits against their assessments for voluntary writings. In 2006, pool administrators discovered that some insurance carriers had not taken advantage of the credits for 2004 and gave them an opportunity to submit so-called “true-up” corrected reports. MWUA gave insurers until March 1, 2006 to submit corrected reports and claim any unclaimed 2004 credits.

In April, 2006, MWUA was still recouping some $545 million in losses stemming from Hurricane Katrina. It sent out its third assessment to carriers, reflecting in these bills any corrected “true-up” reports that had been submitted by the March 1 deadline.

The companies that appealed questioned whether MWUA provided adequate notice of the “true-up” process and the deadline and also raised questions concerning MWUA’s authority and accounting relating to the assessments.

Homesite was assessed $876,354 in the third assessment but balked at paying it in full. The company said it missed the March deadline because it was not aware of the availability of credits.

OneBeacon received a MWUA assessment for $2.5 million that included a lot of farm property for which OneBeacon argued it was entitled to an exemption. But MWUA said the insurer did not officially file for the exemption until two months after the deadline.

In December 2005, RLI was billed $1.3 million. Although it had been in contact with MWUA on several occasions to question this and previous assessments, Chaney found that RLI did not officially submit corrections until May 2006.

Zurich had argued that the assessment process was flawed because of an alleged “secret deal with AIG” under which that insurer was allowed to submit an earlier amended report. AIG had in fact advanced MWUA funds to cover the entire $545 million Katrina bill and its amended report had to do with that loan, according to the findings in Chaney’s report.

Farmers Insurance Group wanted to group its premiums with its subsidiary Foremost but Chaney ruled that this idea did not occur to Farmers until after the “true-up” deadline.

Finally, Aegis Security had questioned the grouping of premiums and reporting of mobile home premiums by other carriers in appealing its assessments, which totaled $15 million.

In his 50-page report, Chaney acknowledged that procedures surrounding the extraordinary assessments after Katrina were not perfect and suggested MWUA could do more in the future to provide information to carriers and identify irregularities in reports.

Topics Carriers Mississippi