MS wind pool insurance costs

[Frank P]

Just got my home owners and wind pool insurance from Farm Bureau. For those interested in costs wind pool is 13.22 per 1000 dollars of coverage.

So $100,000 coverage will cost your $1322.00 dollars. You also have to calculate in contents coverage... so if you insure your house for 200K and contents for 50 K expect to pay $3305.00 for wind pool insurance...

Now you also have to add in your regular home owners insurance, and for about the same amount of coverage expect to pay around 1000.00... throw in flood for 317.00 and you get a grand total of about $4,622.00 per year.... 385 per month.... for now...

Hate to think what people on fixed incomes are going to do.... perhaps move inland away from the coast might be the only thing they can afford...

[MGC]

Frank, we are also with Farm Bureau and our insurance expires midnight Aug 29th (somehow that date sticks in my head for some reason) so we have not gotten the bill yet. Since the home we now occupy survived both Camille and Katrina (no wind damage with Katrina BTW), we are considering lowering our coverage. We paid around 2500.00 last year for all risks. Did you faint when the insurance bill came in?.....MGC

[Frank P]

Frank, we are also with Farm Bureau and our insurance expires midnight Aug 29th (somehow that date sticks in my head for some reason) so we have not gotten the bill yet. Since the home we now occupy survived both Camille and Katrina (no wind damage with Katrina BTW), we are considering lowering our coverage. We paid around 2500.00 last year for all risks. Did you faint when the insurance bill came in?.....MGC

MGC.... for some reason I expected worse... hard to believe but I guess after hearing about it for months, how bad it was going to be and all, I didn't take it quite as bad as I thought I would... I guess I'm fortunate that I don't have a house payment... but sadly my insurance and tax bill per month are pretty close to a house payment... I just attribute it to the cost of living on the beach... which I wouldn't trade for anything...

[Dionne]

Is Farm Bureau the same as Mississippi Farm Bureau?

If it is.......I will prolly go to jail later today for assualt. Months ago our local agent sent us a letter advising they would not renew. We didn't even file a claim. I'd better not find out that they selectively failed to renew policies. Allowing policies to remain in effect on the coast while were almost 100 miles inland.

I absolutely despise these insurance companies.

Our rates doubled.

[Frank P]

Is Farm Bureau the same as Mississippi Farm Bureau?

If it is.......I will prolly go to jail later today for assualt. Months ago our local agent sent us a letter advising they would not renew. We didn't even file a claim. I'd better not find out that they selectively failed to renew policies. Allowing policies to remain in effect on the coast while were almost 100 miles inland.

I absolutely despise these insurance companies.

Our rates doubled.

One in the same... they did not renew my wind insurance.. I had to go to the wind pool.... my overall insurance went up 450%!!!!!!!!!!! I have other friends in Bay St Louis who went thru the same increase as I with MS Farm Bureau.... but they did pay me for hurricane damages which I really didn't expect them to... my damage was 99% atributed to flood... wind didn't do much in my neighborhood in Biloxi... most of the shingles were still on the houses... some trees did fall and cause some house damage problems but that was in some selected areas of my neighborhood...

They told me if I didn't renew by Aug 29, 2006 then they would no longer carry me... so I got a builders risk insurance plan from them in July of 06 when I started building my house

[wxman57]

I find it interesting that it's the wind pool which is so expensive but most of the homes were damaged/destgroyed by the surge (flooding), and flood insurance is still relatively cheap. I really didn't see a lot of wind damage on my trips to the MS coast o rebuild my mother's house. Mosstly sign damage and downed trees. So why isn't flood insurance going up the 450% that Frank P mentioned his wind insurance went up? Makes even less sense when the insurance companies are agreeing that the damage was due to surge and not wind.

[Alladin]

I find it interesting that it's the wind pool which is so expensive but most of the homes were damaged/destgroyed by the surge (flooding), and flood insurance is still relatively cheap. I really didn't see a lot of wind damage on my trips to the MS coast o rebuild my mother's house. Mosstly sign damage and downed trees. So why isn't flood insurance going up the 450% that Frank P mentioned his wind insurance went up? Makes even less sense when the insurance companies are agreeing that the damage was due to surge and not wind.

Residents in all parts of Mississippi are paying higher wind pool rates to subsidize those folks that live along the Gulf Coast in buildings that should be self insured. Everyone will continue to pay high rates as long as these high risk properties are allowed to get wind insurance through the Mississippi Windstorm Underwriting Association.

Florida has a similar high risk program called “Citizens” Insurance, the so called “insurance of last resort”. Florida residents who have homeowners insurance and/or auto insurance are paying a premium to subsidize “Citizens”.

Government leaders seem to think that people that live on the beach should be allowed to buy insurance and that other residents should help pay for that insurance.

Flood insurance is a national program administered by FEMA and has a much broader base and a lot more money.

[Lindaloo]

I find it interesting that it's the wind pool which is so expensive but most of the homes were damaged/destgroyed by the surge (flooding), and flood insurance is still relatively cheap. I really didn't see a lot of wind damage on my trips to the MS coast o rebuild my mother's house. Mosstly sign damage and downed trees. So why isn't flood insurance going up the 450% that Frank P mentioned his wind insurance went up? Makes even less sense when the insurance companies are agreeing that the damage was due to surge and not wind.

Residents in all parts of Mississippi are paying higher wind pool rates to subsidize those folks that live along the Gulf Coast in buildings that should be self insured. Everyone will continue to pay high rates as long as these high risk properties are allowed to get wind insurance through the Mississippi Windstorm Underwriting Association.

Florida has a similar high risk program called “Citizens” Insurance, the so called “insurance of last resort”. Florida residents who have homeowners insurance and/or auto insurance are paying a premium to subsidize “Citizens”.

Government leaders seem to think that people that live on the beach should be allowed to buy insurance and that other residents should help pay for that insurance.

Flood insurance is a national program administered by FEMA and has a much broader base and a lot more money.

PLEASE provide proof that all residents in MS are paying the price because of us here on the Gulf Coast.

You talk as if tornadoes and such do not occurr? The price of insurance is going up because of the anti trust BS that they have hidden behind for years. Those days are over. They should be held accountable for their rise in premiums.

[Frank P]

Hey Alladin, you don't need to live on the BEACH to be pummeled by the winds of a hurricane.... just ask the folks in Hattiesburg and Meridian MS who were pounded by Katrina.... they are nowhere near the BEACH...

Insurance companies are like a legalized Mafia... they're quick to take your money, and if you have a mortgage you have to pay them, but not so quick to pay off...

[Alladin]

PLEASE provide proof that all residents in MS are paying the price because of us here on the Gulf Coast.

You talk as if tornadoes and such do not occurr? The price of insurance is going up because of the anti trust BS that they have hidden behind for years. Those days are over. They should be held accountable for their rise in premiums.

Every company that writes property insurance in Mississippi is required to be a member of the Mississippi Windstorm Underwriting Association and they must contribute money to the “wind pool” so that policies can be issued in the high risk areas. The extra expense of the “wind pool” money paid by each insurance company is passed along to other consumers throughout Mississippi via higher premiums.

Many other states do this as well. Florida, Maryland and Georgia are just a few of the states that have similar laws. The idea is that the coastal areas provide a lot of tourist dollars and other economic benefits for the rest of the state, therefore, lawmakers think that other residents should help pay for the insurance expenses of the coastal folks.


In addition, Katrina related claims wiped out the “wind pool” funds (over $545 million) and insurance companies (by law) have to pay the remaining claims. These expenses will also be passed along to other Mississippi consumers to wit:




Posted on Fri, Feb. 23, 2007

EXTRA

Wind-pool bill now in committee

Hood's proposal not added on
By GEOFF PENDER
SUN HERALD

JACKSON - The House on Thursday unanimously voted to strip a Senate insurance "wind pool" bill and insert language the House passed recently.

The move sends the legislation to a conference committee, meaning House and Senate negotiators can now begin work on a compromise.

"This continues to be a work in progress," said House Insurance Chairman Mark Formby.

The House version includes up to $18 million a year "diversion" to the wind pool of the sales-tax increase on the Coast from Katrina rebuilding.

The Senate and Gov. Haley Barbour oppose this, but agree with the House's plan to use an insurance premium tax paid on every policy in the state for the wind pool.

Some had expected Democratic House leaders Thursday to attempt to amend the bill to include a proposal by Democratic Attorney General Jim Hood to try to force insurance companies to continue writing new home and business policies in Mississippi. Hood last week called for this to be added to the wind-pool legislation - because the deadline for a new stand-alone bill had passed - after State Farm announced it would stop writing new home and business policies in Mississippi. Hood also called on Gov. Haley Barbour and the state insurance commissioner to force companies to continue writing policies until the Legislature can act.

Republican Gov. Haley Barbour refused this request, saying he didn't have that authority. Senate and House GOP leaders say they oppose Hood's proposal, and that it would drive many more companies - including auto insurers - out of the state.

Rep. Bobby Moak, D-Bogue Chitto, did ask Formby before Thursday's vote whether the Hood proposal could be considered during negotiations.
"We are keeping the road wide open," Formby said. "We will not slam the door on any ideas."

The bills are SB 3050 and HB 1500.

[Lindaloo]

But you are blaming the Coast for all this. When in fact you should be blaming the insurance companies for the instability in the wind pool because they are refusing to write policies down here or renew policies on the Coast. If your premium is going up, don't blame us down here! Please do not make US your problem. We are paying high insurance premiums and probably more than most if we can even get any. At least you have that dang option!


The wind pool

The state insurance wind pool was created in the 1960s in an effort to provide wind coverage in areas in the six southernmost counties where companies didn't want to write policies because of hurricane risk. Home and business owners pay premiums into the pool. When damage exceeds the money collected in premiums, the companies that do business in the state have to pay the difference. The companies have had to cough up more than $545 million in wind pool losses from Katrina.

Since 1987, the wind pool has taken in $188 million in premiums and paid out $778 million. After Katrina, wind pool premiums were jacked up 268 percent for business owners and 90 percent for homeowners. The hikes would have been worse if Gov. Haley Barbour had not secured $50 million in federal funds to reduce the increase. Even with the drastic increases, more people are flocking to the wind pool, worsening its financial lopsidedness and risk, because private companies are refusing to write policies on the Coast.

The Crisis

Private insurance companies are halting their policy-writing on the Coast, and as people and businesses flock to the wind pool as their only alternative, it becomes more financially unsound, with its total insured value skyrocketing from less than $2 billion pre-Katrina to about $6 billion today, lacking the wherewithal to pay losses if another hurricane hits.

A recent, 268 percent wind pool rate increase for commercial policies, Coast leaders say, has all but halted Katrina business redevelopment, and a 90 percent rate increase, and lack of availability of private insurance, are thwarting homeowners' rebuilding efforts.

Proposed solutions

• Allow "recoupment" for insurance companies. This would allow them to tack a charge onto premiums, statewide, temporarily to recover losses after a hurricane as long as they stay and write policies in the six South Mississippi counties.

• Provide tax credits and incentives for insurance companies and for customers who hurricane-proof their homes. State Rep. Jessica Upshaw, R-Diamondhead, has also proposed a tax break for people and businesses who are socked with huge increases in insurance premiums.

• Allow higher deductible options - voluntary, not mandatory - for policyholders in the wind pool. This would let them pay lower premiums.

• Encourage wind mitigation techniques by offering premium discounts.

• Pump state and/or federal tax dollars into the wind pool, to provide temporary relief from large rate increases



I hope and pray that Haley Barbour loses re-election. He is nothing but a grand stander when it is convenient for him.

[Alladin]

Certainly there is plenty of blame to go around, however, I do not think that the insurance companies created this problem. The most blame falls upon local governments in coastal counties for allowing and encouraging residential and commercial developments in known high hazard areas.

The local governments have encouraged this growth to increase their tax base. State legislatures is 18 states that have coastal counties all have some form of “wind pool” insurance to encourage development in high hazard areas. Hawaii, for example, would be hard pressed to function without being able to develop its high hazard areas.

These “wind pool” insurance policies work fine, until they are needed. Under normal circumstances the “wind pool” policy holders pay a premium to get their insurance and the policy holders that have normal insurance pay a slightly higher rate to subsidize the “wind pool” folks. As long as there are no storms, it works.

However, when a major storm causes damage, the “wind pool” can’t cover all the claims and residents throughout the state end up picking up the tab. In Florida it’s been handled with an extra tax on insurance policies and in Mississippi it will most likely be handled with an extra sales tax.

The solution to the problem is simple. Don’t insure property in high hazard areas. Let the homeowners and businesses self insure their property and take all the risks. I don’t want to pay a penalty because someone decided to build their home on a barrier island.

[Lindaloo]

Yeah well, I do not agree. You are claiming that the wind pool worked. It may have until Katrina. The insurance industry IS the problem.

I am just glad you are not in control of anything because I have NEVER EVER heard ANYONE speak like this. Have a great day because I am done with you.

[timNms]

Gee, guess this means I shouldn't be insured since I had over $4,000 in wind damage from Katrina....and I'm 20 miles north of Hattiesburg in Seminary, which is well north of the gulf coast. My brother, on the other hand, lives just north of Hattiesburg and had over $20,000 in damage to his home due to wind and rain. I suppose he shouldn't be insured either because like me, he lives in a "high risk" area! Who'd a thunk that Seminary, MS and Moselle, MS were high risk areas for hurricane damage seeing as both are about 100 miles north of the Gulf.

Bottom line is that the insurance companies have been getting fat for years on insurance premiums from folks, but when the disaster of the century strikes, they don't want to pay out what rightfully belongs to their customers. They scheme and lie and cheat people who have lost everything in order to profit. Shame on them! Then there are those who say that people shouldn't be allowed to build in places where hurricanes strike. If one goes by that logic, then the US would be barren land because we'd have to ban people from building in earthquake prone areas, tornado prone areas (Enterprise AL comes to mind), wildfire prone areas, mudslide prone areas.....the list goes on and on. No matter where you build in the US, you face a risk of having a natural disaster in your area. No one is immune to them. That's why there are insurance companies in the first place. If there was no risk, then we wouldn't need them.

[wxman57]

Certainly there is plenty of blame to go around, however, I do not think that the insurance companies created this problem. The most blame falls upon local governments in coastal counties for allowing and encouraging residential and commercial developments in known high hazard areas.

The local governments have encouraged this growth to increase their tax base. State legislatures is 18 states that have coastal counties all have some form of “wind pool” insurance to encourage development in high hazard areas. Hawaii, for example, would be hard pressed to function without being able to develop its high hazard areas.

These “wind pool” insurance policies work fine, until they are needed. Under normal circumstances the “wind pool” policy holders pay a premium to get their insurance and the policy holders that have normal insurance pay a slightly higher rate to subsidize the “wind pool” folks. As long as there are no storms, it works.

However, when a major storm causes damage, the “wind pool” can’t cover all the claims and residents throughout the state end up picking up the tab. In Florida it’s been handled with an extra tax on insurance policies and in Mississippi it will most likely be handled with an extra sales tax.

The solution to the problem is simple. Don’t insure property in high hazard areas. Let the homeowners and businesses self insure their property and take all the risks. I don’t want to pay a penalty because someone decided to build their home on a barrier island.

I think Alladin makes a good point (in bold). I was reading a study by Roger Pielke & Chris Landsea recently. They were normalizing damage from past hurricanes to 2005 dollars. One trend they found was that coastal damage potential doubles every 10 years due to increased building in vulnerable areas. One of the highest risk areas was in Miami/Palm Beach. That area hasn't been hit by a large major hurricane since the 1960s. Andrew in 1992 was too tiny to greatly affect area very far north of Homestead. I believe they calculated that if a hurricane like the 1926 Miami hurricane were to hit again in 2022 that the damage could reach over 500 billion dollars. In 2032 it would be 1 TRILLION dollars damage to southeast Florida.

We're in a pattern that could well bring such a hurricane to south Florida in the next decade or two (more likely than not, maybe). The insurance companies are going to be in for a big hit when a really strong hurricane hits southeast Florida in the not-too-distant future. And then that'll leave many without insurance in the future.

Now I don't advocate razing of coastal properties and returning the land to nature. I don't know what the real solution should be. Certainly, building codes have to be rigidly-enforced in vulnerable coastal areas. And those who chose to live in vulnerable areas should be paying a lot more for insurance than those in less-vulnerable areas. How much more? 10 times? More than that? I dont' know. In order for an insurance company to make money, it must take in more than the claims it pays out. So if you're located in an area likely to receive severe damage in the next 20 years, like S. Florida, then you should be paying enough in insurance premiums to cover your home's damage/destruction in that 20-year period plus a profit for the insurance company. Of course, it doesn't work out quite that way in the real world. Insurance companies can't charge as much as is needed to recoup claims in these highly-vulnerable areas so they raise the rates of those of us who choose to live in less risky areas to cover the difference. I'm certainly not a fan of that. You want to live on the beach, then pay through the nose for insurance (as Frank would agree he is doing). Just don't raise my rates to cover the cost of someone who wants to live where his/her home will be damaged or destroyed in the next hurricane.

I don't agree with how risk is now established. For example, someone living on the Florida coast near Jacksonville (NE Florida) pays the same premium as someone in Miami. Jaclsonville has been hit by only 1 significant hurricane in the last 100 years (Dora in 1964). The NE Florida coast through the Georgia coast is just not as high a risk as the southern peninsula, so they shouldn't pay the higher rates. It's a mess. Coastal communities can't survive without the added tax revenue from new constuction. We're in for some major insurance company collapses in the next decade or two.

[wxman57]

....snip.. Who'd a thunk that Seminary, MS and Moselle, MS were high risk areas for hurricane damage seeing as both are about 100 miles north of the Gulf? ... snip...

Take a look at potential inland wind penetration on the NHC web page:

http://www.nhc.noaa.gov/HAW2/english/wi ... _121.shtml

For a Cat 3 striking the MS coast, TS winds could reach southern Kentucky if it's moving at 14 mph. 60 mph 1-minute winds extend to northern MS. Hurricane-force 1-minute winds (all with much higher gusts) could extend well inland, even beyond 100 miles inland.

I'm not saying you shouldn't be insured, just point out a fact about inland wind penetration in hurricanes. You're certainly at much lower risk of wind damage from a hurricane than someone in Biloxi or Gulfport, but at a significanlty higher risk than a location maybe 150-200 miles to your north.

[Lindaloo]

Hurricanes, tornadoes, earthquakes. I guess we should not build anywhere. Why build high rise buildings in a known earthquake prone area? What about the nation as a whole that by some say we all live in a flood zone? Some of the logic that some people come up with cracks me up about the people living and working on the coasts. lol.



Let's not just say we are high risk because of hurricanes. Everybody is high risk.

Now FWIW, I did not agree with those casinos being built where they were here on the MS Gulf Coast. The damaging scenario was there and I have always voiced that they should not be there. And another point that I do agree with that Alladin said was the fact that local governments want tax dollars. This is true because if those casinos came inland they would lose tidelands monies. But, when he lumped homeowners that have built their lives here and have deep ties to an area into the same category as local government greed, then he lost my support and causes me to view him as someone who is just disgruntled because he is having to pay higher insurance premiums like everybody else and is looking for someone to blame!

Here in Pascagoula, we have a man-made beach that is extended way out into the water. The houses on the east end and that were protected by this structurally survived the surge whereas, the houses that were sitting right on the water were swept inland, if they were not destroyed by tornadoes first.

But, I do not judge anyone because it is not up to me to do that. Be careful what you say about those people that live on the Gulf Coasts because as they say "What comes around, goes around"

[MGC]

Everyone has made some good points in this thread. Yes, we humans have created a mess with all of this. I do believe that insurance companies should charge higher premiums according to the risk they assume. I do not expect homeowners in lower risk areas to subsidize my rates. Of course the insurance companies have a ficudiary responsibility to its policy holders, something State Farm has blatenly ignored. Personally, living near the coast is well worth the extra monies required for insurance, I plan on live out my days here as long as I can afford it, but I might have to get a part-time job to pay for wind insurance. The biggest fault though is the federal government. Flood insurance is too cheap. As seen with Katrina, the majority of the damage was caused by water not wind, yet the permiums for flood are far cheaper than wind. The cheap flood rates, along with governments thirst for tax revenue, have encouraged development along the coast.....MGC

[wxman57]

Good points, MGC. I had commented about that earlier. Most of the homes on the MS coast were destroyed by water, not wind, yet the wind pool rates went way up and flood insurance remained the same.

Linda, I didn't say we shouldn't build anywhere, just that insurance premiums should match the risk and not be subsidizedt by those in less risky areas. One way insurance companies can calculate risk potential is to analyze claims made in previous decades for each area. There is a BIG problem with this in some areas, like Florida. For most of the last 40 years, the Florida peninsula has been relatively untouched by significant hurricanes. Andrew was quite tiny as hurricanes go. But climatological data suggest that such a lull in landfalling hurricanes in Florida is to be expected during a cool-phase Atlantic Multidecadal Oscillation (cool water). So if insurance companies are using the past 20-40 years to estimate future claims in Florida they'll be way off, as the Atlantic is not in warm-phase. Last time this pattern developed, the peninsula was hit by a dozen major hurricane in 25 years. Imagine a major hurricane hitting the southern Peninsula every 2 years for the next 2 decades.

[Lindaloo]

I understand what you are saying now wxman.

You hit on some good points MGC. Although, either way whether flood goes up instead of wind, the end results will still be the same because of the "required to have" wind and flood. Until they come to some sort of middle ground in both areas, we are all going to be insurance poor.

wxman, we do have very strict building codes here on the MS Coast and they are enforced. Those strict codes do not mean anything as we just found out with Katrina and Rita.