MS considers paying residents to strengthen homes against storms for lower insurance rates
Mississippi homeowners could see some relief from high insurance rates under a bill the state Legislature is considering, but the payoff won’t come without work.
Fortifying homes against wind damage is one of the only ways to bring down rates as climate change increases the intensity of hurricanes, inflation drives up construction costs, and insurers pay more for reinsurance that covers their losses.
A bill pending in the state House would create a trust fund that would provide grants to homeowners for fortifying their homes against severe weather or building safe rooms for tornadoes.
The hope is that the program will bring down insurance rates for those homeowners and encourage more insurers to write policies along the coastline, where some companies have ceased business.
“Consumers are calling us and they’re looking for solutions to their rising rates,” said Andy Case, director of consumer services for the Mississippi Insurance Department. “They want a way to counter that, to get their rates back down or get them stabilized. The elements of this bill have proven effective in other states.”
Fortified program protects from hurricanes
The Mississippi Insurance Department has studied mitigation programs in other hurricane-prone states to design a mitigation program here.
One of the most successful programs is in Alabama, where the Wall Street Journal recently reported that homeowners are receiving discounts on their insurance policies, and finding companies to insure them in coastal markets, when they follow specific standards for construction or retrofits.
Alabama follows the Fortified program designed to protect homes from severe weather. The program was developed by the Insurance Institute for Business and Home Safety, an organization the insurance industry funds. When Category 2 Hurricane Sally hit Alabama in 2020, damage was widespread, but 95% of Fortified homes saw little to no damage, an IBHS report indicated.
Mississippi’s mitigation program would also closely follow IBHS standards, Insurance Commissioner Mike Chaney said.
Alabama issues homeowner grants of up to $10,000 for retrofitting homes to Fortified standards. Mississippi’s program would likely have a similar cap on grants, Chaney said. Insurers are already required to offer discounts in Mississippi for retrofits that meet IBHS standards, with discounts so far ranging from 15-30%.
MS needs proven mitigation program
The mitigation program would be funded with a one-time contribution of $5 million from the Mississippi Surplus Lines Association of insurance companies that do business in Mississippi but are not regulated by the state. Admitted insurance carriers, those that are-state-regulated, would contribute a total of $1.5 million annually to the fund.
Chaney said the Insurance Department would hire a third party to run the mitigation program.
State Sen. Scott Delano, a real estate developer who serves on the body’s Insurance Committee and has long focused on the issue, wants to see a provision added to the bill that would require requests for proposals from vendors interested in running the program.
He said Habitat for Humanity and Smart Home America, funded in part by the insurance industry, are two of the only organizations with experience running mitigation programs. He said Smart Home America does not answer to the insurance industry but is trusted to enforce Fortified standards so that insurance companies are comfortable offering discounts.
Delano plans to work with House leadership on the bill if and when it reaches the Senate. It is currently in the House Insurance Committee, with a Tuesday deadline for a vote sending it to the House floor.
He said that he wants to see “a proven mitigation program” put in place because it’s one of the few ways the Legislature can “help reduce premium costs” statewide.
The House bill also adds severe-weather retrofits for homes to the eligible expenses that can be paid from a resident’s tax-free catastrophe savings accounts. The accounts can already be used to cover deductibles and uninsured losses from disasters.
Retrofits that could be covered from a catastrophe account include roofs, windows, and exterior doors, whole-home generators, lightening protection, fire-resistant wall systems and other improvements. The account also could be used for building safe rooms for tornadoes.
This story was originally published March 4, 2024 at 5:00 AM.
