Homeowners Insurance Rates to Increase in Coastal States

Published: Tue 08 Dec 2009

Perry Begay

The insurance company with the most homeowners' policies in Mississippi has the green light to increase rates 19.5 percent in the three counties hardest hit by Hurricane Katrina. State Farm Fire and Casualty Co. actually wanted a 45 percent hike and was "disappointed" the smaller increase was granted.

State Insurance Commissioner Mike Chaney said the increase covers the wind portion of policies starting in mid-February. Residents in Hancock, Harrison and Jackson counties are still rebuilding more than four years after the hurricane. There are about 26,000 State Farm policies in those counties.

In allowing the rate hike, "our role is to make sure the rates requested are not excessive and are justified and actuarially sound. I believe we have fulfilled that role," said Chaney, who considered the increase proposed by the company "way too high."

Company spokesman David Majors said, "State Farm is disappointed that we were unable to achieve rate adequacy in the coastal areas and that Commissioner Chaney was unwilling to allow us to implement our needed rate." It earlier implemented a 3.9 percent rate increase in the rest of the state.

In areas know to be subject to surges in the counties, the company plans to eliminate wind coverage from 1,800 policies. "The reason I went ahead and announced this now is that I don't want people to wait until February to try to find wind coverage," he said. Chaney said the insurance department had no authority to prevent cancellation of wind coverage by any insurer.

No new State Farm policies will be written to cover wind damage in the three coastal counties. Those who cannot get the coverage would have to apply for it through the state-run Mississippi Windstorm Underwriting Association, also known as the wind insurance pool. It was created to cover those who residents who cannot get policies from regular insurers.

The number of pool policies grew from 16,000 before Katrina struck to nearly 43,000 now. Chaney plans to ask state lawmakers to approve $20 million in funding for 2010 to keep those rates stable.

The commissioner said Mississippi residents have seen their State Farm rates jump 10 percent this year. "My agency has been very aggressive in regulating insurers but more rate increases from other insurers could be coming soon," Chaney said. "This is not the end of it."

Allstate already has requested a 65 percent rate increase in Mississippi. As it did with State Farm, Chaney's department has asked Allstate for more information to consider the rate hike.