In an effort to combat the rising cost of home insurance in Mississippi, a new legislative proposal is making its way through the state’s legislative body, promising some financial relief for homeowners.
The solution? A strategic focus on strengthening homes to withstand the destructive forces of wind damage. This initiative comes at a time when the escalating severity of hurricanes due to climate change, the inflationary pressures on construction materials, and the increased costs of reinsurance are driving insurance premiums up.
To try to dull the effect of rising premiums, a proposed bill in the Mississippi House aims to set up a trust fund to award grants of up to $10,000 to homeowners to reinforce their homes’ resistance to severe weather or for the construction of safe rooms to protect against tornadoes. The ultimate goal of this initiative is to allow carriers to lower insurance premiums for participating homeowners and to attract more insurance providers to the coastal regions, areas from which some insurers have withdrawn.
Andy Case, the director of consumer services at the Mississippi Insurance Department, emphasized the urgency of the situation, stating: “Consumers are calling us and they’re looking for solutions to their rising rates. 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.”
The initiative draws inspiration from similar mitigation efforts in other states vulnerable to hurricanes. One notable example is Alabama’s success with the Fortified program, endorsed by the Insurance Institute for Business and Home Safety, a research organization funded by the insurance sector. This program sets construction and retrofitting standards designed to safeguard homes against severe weather. Following these standards has not only protected homes from significant damage during events like Hurricane Sally in 2020 but has also made it easier for homeowners to obtain insurance discounts and find insurers willing to cover them, particularly in coastal areas.
In terms of financial assistance, the proposed Mississippi program could offer grants up to $10,000, mirroring Alabama’s approach. The requirement for insurers to provide discounts for homes meeting these standards is already in place in Mississippi, with discounts currently ranging from 15-30%.
The funding for the mitigation program would come from an initial $5 million contribution from the Mississippi Surplus Lines Association, supplemented by an annual $1.5 million from state-regulated insurers. Oversight of the program would be outsourced to a third-party, according to Insurance Commissioner Mike Chaney.
State Senator Scott Delano, who has a vested interest in insurance reform, advocates for the inclusion of a competitive bidding process for organizations to run the mitigation program. He highlighted the potential role of non-profit organizations like Habitat for Humanity and Smart Home America, the latter of which, despite being funded partially by the insurance industry, operates independently to uphold Fortified standards and facilitate insurance discounts.
As the bill progresses, with a critical vote looming in the House Insurance Committee, Delano has said he is prepared to collaborate with House leadership to ensure the establishment of a robust mitigation program. This program is seen as a vital measure for reducing insurance premiums across the state. Additionally, the bill proposes expanding the use of tax-free catastrophe savings accounts to include expenses for severe-weather home retrofits, such as enhanced roofing, windows, doors, and other protective improvements, further aiding homeowners in their quest for safety and affordability.
