Barbour vetoes Windpool money; Rates will not increase - - The News for South Mississippi

Barbour vetoes Windpool money; Rates will not increase

JACKSON, MS (WLOX) - Governor Haley Barbour Friday vetoed a portion of a bill to subsidize the Windpool, but the veto will not impact rates for property owners according to Mississippi's Insurance Commissioner.

Governor Barbour vetoed a section of House Bill 1642 that subsidized the Windpool with funds from the Hurricane Disaster Relief Fund. The Hurricane Disaster Relief Fund exists to repay the federal government for $400 million of hazard mitigation expenditures in South Mississippi. Barbour said the veto will protect $20 million of funds owed to the federal government as matching contributions 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," Governor Barbour said. "Further, 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."

Insurance Commissioner Mike Chaney said the veto will not increase coastal rates this year and will not have an immediate impact on coastal Windpool rates

"In the previous fiscal year, the Legislature had given the Windpool 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. 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," Chaney said.

Chaney said Windpool Executive Director Joe Shumaker has confirmed the Windpool board does not anticipate any projected Windpool rate increases in 2010, and added "I will not approve any rate increase."

The Windpool board meets next week.

The Windpool provides Gulf Coast residents and businesses insurance for property in high-risk areas that are not covered by private insurers. The program has received $160 million from state and federal Community Development Block Grant funds to temporarily lower insurance rates.

Governor Barbour said long-term solutions are needed to continue recovery and secure affordable insurance.

"The Wind Mitigation Retrofit Program is the right approach to rebuilding the Gulf Coast. The program uses $20 million in federal funds to help homeowners make their homes sturdier rather than relying on subsidies," the governor said.

"While I continue to believe the state must focus on lowering 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 Windpool."

Near the end of 2009 and the beginning of 2010, the Windpool received additional funding of $18 million from the Hurricane Disaster Reserve Fund. This fund was created in 2006 to defray the state's share of any non-federal matching requirements for Federal Emergency Management Agency grants associated with Hurricane Katrina and other disasters.

Coastal consumers are urged to use any of the several options the Windpool and other insurance companies offer to lower their premiums. Among those options are the sliding deductible and utilization of the mitigation credits which were implemented in 2009.

"We reduced rates an average of 11 percent in 2008 and have kept rates constant for three years; however given the current state of the economy, state subsidy funding is not always going to be readily available. The key to long term rate stabilization solutions are through Hazard Mitigation programs like those offered by the Windpool and some commercial underwriters. I will announce the awarding of a $20 million mitigation program for coast homeowners next week and this program will also help to reduce rates," Chaney said.

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