PASCAGOULA — Mississippi Insurance Commissioner Mike Chaney said he was not happy about granting a 19.5 percent homeowners rate increase to State Farm, but he had little choice.
“Would you want me to have 26,000 policies canceled on the Gulf Coast with nobody to write coverage for those 26,000 people?” Chaney asked.
He announced on Nov. 30 that he had approved the rate increase for State Farm Fire and Casualty Co. on homeowners insurance in Jackson, Harrison and Hancock counties.
In a statement, Chaney said the rate increase balanced the need for “affordable rates and sustainable premiums in face of rising costs to companies.”
State Farm had requested a 45 percent rate increase.
“It’s basically an issue of trying to balance the ball and tap dance on the razor blade,” said Chaney. “People want to say, ‘kick them out,’ but you’d better think about 26,000 people having no coverage.”
After the rate increase, which takes effect in January, a State Farm spokesman said the company plans to drop wind insurance from as many as 1,800 policies.
Allstate Corp. has a request for a 65 percent rate increase on homeowners policies pending, but Chaney said, “You can rest assured that is not going to be approved.”
Allstate’s request cites reinsurance costs and lower investment income among other factors, he said.
“I’m just not going to let them do it,” he said. “It is just that simple.”
Chaney said a public hearing on the Allstate request may be held in January.
There are no easy solutions for property insurance on the coast, Chaney said.
“Property insurance on the coast will always be a struggle for me for the next several years until we can figure out a way to get it available and affordable,” he said. “It is an issue I take very seriously because it affects economic recovery on the coast.”
Chaney said insurance commissioners are discussing remedies to the rising cost of insurance.
“We are working together,” he said.
“The key to bringing rates down is to build stronger homes, stay out of the flood plain and stay out of the wetlands program,” he said.
The state has about 42,000 wind coverage policies in the Mississippi Windstorm Insurance Underwriters Association, said Mark Cumbest, a board member.
There were about 16,000 policies prior to Hurricane Katrina in 2005, he said.
Harlan Kirgan/The Mississippi Press