NU Online News Service, May 18, 1:20 p.m. EDT

Mississippi Gov. Haley Barbour's veto of $20 million to the state's Wind Pool will not result in an increase in premium rates this year or next, the state's insurance commissioner said.

Mike Chaney, Mississippi Insurance Commissioner and state Fire Marshal, said the governor's veto of the money last week for the Mississippi Windstorm Underwriting Association, called the Wind Pool, would not adversely affect rates this year or possibly next year because money was held in reserve.

"In the previous fiscal year, the legislature had given the Wind Pool an extra $20 million in subsidy, which I held in reserve to maintain level rates in case there was a budget shortfall, which has now happened," Mr. Chaney said in a statement.

"With these reserves, we are able to maintain stable rates throughout the remainder of this year and, through careful negotiations with reinsurers, possibly next year as well," he continued.

He said the Wind Pool's Executive Director, Joe Shumaker, confirmed to him that there is no anticipated rate increase for this year. Mr. Chaney added he would not approve any rate increase.

On Friday, Gov. Barbour said he vetoed a portion of House Bill 1642 that would have given the state's Wind Pool $20 million. He said he did so to protect matching contributions from the federal government for Hurricane Katrina recovery efforts.

"For more than three years, we have tried to get the federal government to accept in-kind payment of the nearly $100 million we owe them, but they have not agreed," the governor said in his veto statement.

"Further," he continued, "the devastation caused by recent tornadoes in Central and North Mississippi will require additional state funds to match federal disaster-related expenditures."

"Therefore, spending $20 million of the Hurricane Disaster Reserve for any purpose other than this federal match is not only unacceptable, but irresponsible."

The governor added that long term solutions are needed to lower insurance rates along the coast.

"I believe a long-term approach requires us to focus on strengthening construction instead of continuing to subsidize insurance policies through the Wind Pool," he said.

Mr. Chaney noted that Wind Pool rates were reduced an average of 11 percent in 2008 and have remained constant for three years.

But, he added, given the current state of the economy, "state subsidy funding is not always going to be readily available."

He continued, "The key to long term rate stabilization solutions are through Hazard Mitigation programs like those offered by the Wind Pool and some commercial underwriters."

Mr. Chaney said he would announce the awarding of a $20 million dollar mitigation program for coastal homeowners next week, which is designed to help reduce rates.

Special Reports /

Miss. Gov. Veto Will Not Cause Wind Pool Premium Increase

Related Stories

Recommended For You