Mississippi Wind Pool Requests Triple-Digit Rate Hike

From Insurance Journal:

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.

Wind pool policies were only on average $800 per year? It doesn’t take rocket science to know that that’s grossly inadequate for a hurricane-prone region.

While I can empathize with the pain Mississippi coastal homeowners insurance customers will feel, under the present system, it’s considered reasonable to expect an insured to pay a premium commensurate with the risk they pose. Otherwise, you’ll end up with direct or indirect subsidies, such as the amount that we’re having to add on to my company’s rates on the business we have in northwestern MS to recoup the assessment.

If these sorts of rates are deemed not in the public interest, however…perhaps Mississippi should join Florida and Louisiana in seeking alternate ways to reduce insurance costs through new forms of risk diversification, alternate funding mechanisms, and the like.