Under HB 1642, the legislature sought to defray the expenses for Hurricane Katrina recovery efforts by the Mississippi Department of Insurance for fiscal year 2011, which begins July 1. The legislation included allocating $35 million to defray the expenses of windstorm reinsurance through the Windpool, using $15 million from the Mississippi Windstorm Underwriting Association Reinsurance Assistance Fund and $20 million from the Hurricane Disaster Reserve Fund.
Barbour vetoed the latter allocation, indicating a desire to protect the $20 million in funds owed to the federal government as matching contributions for recovery efforts.
The Windpool provides Gulf Coast residents and businesses with insurance for property in high-risk areas uncovered by private insurers. The Windpool receives $160 million from state and federal community grant funding to temporarily lower coverage rates, according to Barbour’s office.
“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,” 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.”
In a statement, Mississippi Commissioner of Insurance Mike Chaney said Barbour’s veto will not increase coastal insurance 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,” Chaney said. “ 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 added that the Windpool board of directors has taken a number of pre-emptive actions in recent years to keep premium rates on Mississippi’s coast “constant” for the past three years.
Barbour proposed long-term solutions to continue the state’s recovery efforts while also securing affordable insurance.
“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,” he said.