I noted the Sun Herald ran an insurance related editorial and covered the continuing fight to get another 40 million dollar taxpayer subsidy from the legislature to the windpool this session. We’ll start with the heavily commented upon editorial that ran Thursday:
To appreciate the urgency of finding a way to lower residential insurance rates on the Coast, consider where our economy would be if a large segment of South Mississippians were not paying hundreds and thousands of additional dollars in premiums each year.
Much of that money would be circulating.
It could be used to make car payments. It could be used to make home improvements. It could be used to make countless purchases.
It could be used to pay for medical and dental services now being put on hold due to the expense.
Surely every sector of our economy — wholesale as well as retail, dining and entertainment as well as professional services — would be bolstered, if not booming.
Instead, insurance costs drain our economy of needed cash.
Unless a national solution is found, this situation could easily spread up and down the nation’s coastlines and put the squeeze on tens of millions of Americans.
It may just be a matter of time
IMHO the problem has spread with differing manifestations depending on the locale. Some of our older posts which describe the manifestations of the problem also generate some of our most reliable consistent site traffic from the Insurance circle being broken in North Carolina to Cape May feeling the pressure with Pennsylvania experinceing pullouts to the ongoing saga of the Florida Citizen’s Insurance and a state run reinsurance program that is a shambles due to the credit crisis. Meantime the entire southeast is being price gouged for fictitious wind coverage – fictitious because the insurance companies will do anything they can not to pay.
One notable exception to this was the Mississippi wind pool which made excellent good faith settlement offers after Katrina. Unlike Alabama which is evidently a last bastion of George Bush style “no regulation bury your head in the sand” approach economic theory, the pols in Mississippi have been steadily feeding our private windpool millions of dollars in taxpayer subsidy so it can purchase even more reinsurance to shield private insurers from possible future assessment. While the windpool rates have moderated somewhat they remain very onerous to the everyday people that make up 99% of the population ont he coast. Unlike the Sun Herald we at Slabbed oppose using taxpayer money for this purpose, not because of political ideology, rather because it does not solve the underlying problems inherent in the current system. Personally I also do not think the Stennis Institute Study is worth the paper it is printed on as its estimates of economic impacts are little more than blind guesses.
We’re in the minority in that viewpoint on the coast however as pols are trying to get whatever relief they can to the fleeced policyholders on the coast. Michael Newsome at the Sun Herald picks up the story:
Coast leaders are hoping a proposal to prop up the wind pool insurance program with an extra $20 million doesn’t fall victim to low state funds when lawmakers return to the Capitol next week to finish a budget.
The appropriations bill for the Mississippi Insurance Department for next fiscal year contains $40 million total, including the extra $20 million, for reinsurance programs aimed at offsetting premium increases in the wind pool, which is the insurance of last resort for homeowners who can’t get private wind coverage.
A recent study from the John C. Stennis Institute of Government at Mississippi State University shows that the wind pool cash would more than pay for itself if 90 percent of the money goes toward rate reductions for the 42,000 Mississippians in the program.
The study shows that rate reductions could generate 715 local jobs, $26.9 million in new state tax revenue and $72 million in consumer spending.
House Appropriations Chairman Johnny Stringer, D-Montrose, along with Senate Appropriations Chairman Alan Nunnelee, R-Tupelo, and others, is a conferee on the Insurance Department’s appropriation bill. He said a clearer picture of the state budget will emerge when Gov. Haley Barbour’s office delivers more funding information to the Legislature about federal money that would be plugged in to the state budget. Nunnelee didn’t return a phone call by press time.
Stringer believes having a 50 cent per pack cigarette tax increase agreement among legislative leaders might help the wind pool plan, because some of the tax will go into the general fund.
“The House is still committed to fund that,” Stringer said. “We feel like it will pay for itself with the new development on the Coast.”
Stringer said lawmakers will meet about the budget on Monday and will go back in session on Wednesday to finish it up.
Brian Sanderson of the Gulf Coast Business Council said Coast leaders were monitoring the situation and have been in contact with lawmakers. He said Coast officials know they have some “work to do” to get the measure passed.
“The Stennis study shows that this will more than pay for itself,” Sanderson said. “This is just not a one time expenditure that is going to vanish.”
A few years ago, the Legislature set aside a total of $80 million over several years, including $20 million for fiscal 2010. Recently, the GCBC asked for an additional $60 million over the next few years, including the extra $20 million next year, which would bring the total to $140 million.
Lawmakers might consider the rest of the $60 million extra in the coming years.
But earlier this year, some fiscally conservative Senators were hesitant about giving the extra $20 million, and there was also some worry that possibly the money already set aside might not be available.
Lt. Gov. Phil Bryant’s staff wouldn’t offer a prediction, but they said Bryant was “hopeful” the extra $20 million would be made available and he was working to get it. Bryant presides over the Senate and wields much political influence there.