Some comments left on Nowdy’s excellent post “Bet your sweet potatoes on the weather and take the pot” brought to mind a question I asked Dr Edwin Duett at Commissioner Chaney’s insurance forum in response to his remark in reference to HR 3121, “You don’t want actuarily sound wind premiums”. My question was something along the lines of how do we know exactly what constitutes “actuarily sound”? Before I ramble on further and invite an email from Nowdy that I’ve once again buried my lead I’ll disclose I’ve concluded that insurance is the synthesis of a healthy dose of complex financial calculation along with art in the form of literary sophistry.
I don’t know what is in Commissioner Chaney, Senator Wicker or Governor Barbour’s hearts when they proclaim support for the HR 3121 multi peril concept but sometimes I think I detect a wee bit of political sophistry in their positions. I came away with the feeling the Mississippi Press editorial board does as well when I read their opinion printed yesterday that Gene Taylor’s multi peril bill needs a bigger push which also referenced the Commish’s recent visit to Jackson County to speak to the Kiwanis Club. I wonder if our readers come away with the same impression:
It’s fascinating that Mississippi Insurance Commissioner Mike Chaney doesn’t “see any way that the private industry can cover all the major catastrophic events that can happen in this country.”
Chaney made that remark as he spoke at the Pascagoula Kiwanis Club meeting Tuesday. At the same meeting, Chaney declared he is for the all-perils insurance proposal championed by Rep. Gene Taylor. On the flip side, Chaney doubted that adding wind coverage to the National Flood Insurance Program can pass Congress. Taylor’s bill passed in the House but stalled in the Senate with some senators questioning the cost and a veto threat coming from the White House.
It would be easy to paint the wind insurance defeat along party lines. However, Taylor is a Democrat and Chaney is a Republican. This may involve a vision for America’s coast rather than party affiliation. A story in Thursday’s edition about the Jackson County real estate market included a point that the cost of insurance can be a deal-killer for property buyers. It’s wind coverage that is the high-priced item after the mortgage.
What that means is the shipyard worker and teacher — average working people — may be priced out of living where they work. If there is basic wind coverage offered throughout the United States, the price could moderate to something like the cost of flood insurance. The average house would be covered and average folks could own their houses in places like Jackson County.
What’s happened since Hurricane Katrina is the insurance industry and elected officials didn’t lead the way to change. Mississippi operates the wind pool through the Mississippi Windstorm Underwriting Association. That taps into the companies writing property insurance in the state, but some companies, such as State Farm, opt out of doing business on the coast. Chaney said other companies are stepping forward to write policies where State Farm has dropped out. Similar conditions exist in other hurricane-prone states. That’s not the solution offered through a national program that would spread the risk across the country and make rates affordable.
A civil trial that’s been ongoing in Jackson County Circuit Court pits the homeowners against their insurance company at the time of Katrina. The company argues water, not wind, damaged the house. The couple contends there was wind damaged. One fact stood out in the case and that is the Beach Boulevard house was insured through the National Flood Insurance Program and the couple received $350,000 for water damage. Why not add wind coverage with a similar cap to the national program?
If insurance commissioners such as Chaney can see the need for a national wind insurance plan, why aren’t they convincing Congress and the White House?