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High Cost of Insurance Still An Issue in Recovery of Mississippi Gulf Coast

By Rhonda Miller | Published 29 Aug 2011 11:05pm | comments
After Hurricane Katrina destroyed their home, Lis, left, and Lee Bosarge rebuilt their house on the same property, near the water and the foot of the Bay Saint Louis Bridge.

The high cost of insurance is often blamed for slowing the recovery of the Gulf Coast from the destruction of Hurricane Katrina.

Today in our series, Mississippi Six Years After Katrina: From Rubble to Resilience, MPB’s Rhonda Miller takes a look at how officials and homeowners are confronting the issue of insurance.

When it comes to rebuilding from Hurricane Katrina, business leaders, elected officials, homeowners and realtors always have the same complaint.

"Insurance is still the number one issue affecting our rebuilding...insurance has been a huge issue for the reconstruction all the way up and down the coast…when the insurance jumped up…the killer on the mortgage escrow is the insurance, that’d be $346 a month, just for the insurance."

These are people face-to-face with the insurance problem. Hancock County Chamber of Commerce Executive Director Tish Williams. Bay Saint Louis Mayor Les Fillingame. Former Gulf Coast resident Barb Corry. And Realtor Ray Gonzales.

State Insurance Commissioner Mike Chaney says storm-proofing a house saves money."

"Availability is not a problem on the Gulf Coast, affordability is a problem," says Chaney. "I’m often asked, ' What are you doing about insurance rates?' What we’re doing is building a stronger fortified home. We’re staying out of the flood plains, staying out of wetlands and having proper land use. But a fortified home out of the flood plain will reduce your rates 50 percent in the state of Mississippi, especially in the lower three counties of the Gulf Coast.

In spite of recommendations to move away from the water, it’s just not going to happen for people like Bay Saint Louis native Lis Bosarge. Katrina washed away her family’s home, then they had problems with insurance. But she’s not moving inland.

"This is the place where we wanted to stay and raise our children and be part of the community, and we wanted to be in the rebuilding efforts," Lis Bosarge said.

Her husband, Pascagoula native Lee Bosarge, has a long list of reasons they choose to live one block from the water, near the foot of the Bay Saint Louis bridge. 

"Well, we’re standing out on the deck and you can see the Bay Bridge from here. You can see the water and the railroad bridge and pelicans flying across, and seagulls. We’ve seen bald eagles from here, as well," Lee Bosarge said.

 They rebuilt with a Small Business Loan, while they argued with their insurance company about whether wind or water destroyed their former house. They joined a class action lawsuit, and finally settled with the insurance company. Even when they had an empty lot, Lee Bosarge says they were loyal customers.

"We kept paying our insurance until April of this year," Lee Bosarge said. "We had received a letter a couple months before saying that they were going to drop us completely, including homeowners."

Bosarge says their company apparently dropped everyone within 1,000 feet of the water. Despite hearing horror stories about insurance costing up to $10,000 a year, they found a company covering them for $3,800. They think that’s reasonable.

It could be a sign competition is beginning to bring down the cost.  Insurance Commissioner Chaney says that’s the goal.

"What I have been able to do is recruit 130-plus new companies in the three-and-a-half years I’ve been Commissioner. Ten percent, almost 11 percent, of the business written in the lower three counties are written by companies that did not write pre-Katrina," Chaney said.

But for many homeowners, like Barb and Pat Corry, the jump in the cost of insurance, up to $2,800 a year, was the last straw. They sold their Biloxi home and moved to Hattiesburg.

"Oh, it was a decision we came to when the hurricane insurance went up and our health insurance went up," Corry said. "Between the two of them, we could not afford to stay there any longer. We had to go somewhere we could afford."

In a well-built home in Long Beach, realtor Ray Gonzales says before Katrina, insurance on this house would have been $1,600 a year. Now it’s $4,000.   Gonzales says something has to change.

"I am hoping it will continue to change for the better, if nothing else, other than to stabilize. Because I don’t know how much further we can continue paying these kind of rates," Gonzales said.

Insurance Commissioner Mike Chaney says he continues to look for ways to improve the situation.

"We do have a study that’s going on now, by a major think tank, looking at the cost of insurance on the Gulf Coast, what we can do to reduce the rates," Chaney said.

With mortgage rates hovering at an attractive four percent, reducing the cost of insurance could energize the real estate market and help fuel the continuing recovery of the Mississippi Gulf Coast. 

 

Images

After Hurricane Katrina destroyed their home, Lis, left, and Lee Bosarge rebuilt their house on the same property, near the water and the foot of the Bay Saint Louis Bridge.


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