Wind insurance rates spiked on the Mississippi Gulf Coast after Hurricane Katrina, climbing to almost twice what they were before the storm. MPB’s Evelina Burnett takes a look at where things stand today and what the future might hold.
Mississippi Insurance Commissioner Mike Chaney says insurance rates through the state windpool have been lowered several times since he took office in 2008. Even with a 3 percent increase in 2013, he says, windpool rates are still much lower than they were at their post-storm peak.
“We’ve got $44 billion in coverage in the state run windpool," Chaney says. "Rates average about $900 per $100,000. That’s not quite $200 from where they were pre-Katrina.” Chaney says rates pre-Katrina averaged $712 per $100,000.
Still, Chaney says when you factor in the other insurance homeowners need, as well as changing replacement costs and other factors, he estimates property insurance rates have doubled since pre-Katrina.
In terms of lowering rates, he thinks the future is mitigation.
“That means you go in and you put hurricane clips on a house to keep the roof from blowing off and shutters, and you use 1.5” screws in the door, instead of 3/4" to keep the doors from blowing in," he explains.
The state now requires that insurers offer credits for homes mitigated to an industry standard called Fortified, which was created by the Insurance Institute for Business and Home Safety. Julie Rochman is the institute’s president.
“The idea behind the Fortified requirement is it’s very specifically targeted at what you can do to protect your home against high winds of the type you’d see during a tropical storm," Rochman says.
Insurance Commissioner Chaney says, in a study his department did, homeowners who mitigated their homes were able to leave the windpool and saw a significant drop in rates.
The Insurance Institute for Business and Home Safety also recently looked at regulations in coastal states, including Mississippi, when it comes to roofs. Institute president Rochman says they found a lot of things have changed for the better.
These include "enactment of stronger building codes, standards and requirements in a number of areas, that include contractor licensing, pulling permits, inspections," she says. "Consumers are much better protected when they need to put on a roof or repair a roof than they were 10 years ago."
Rochman says the institute focused on roof regulations because the roof is the home’s first line of defense during a storm.
