Skyrocketing property, flood insurance rates slow economic development on MS Coast
Business and homeowners are searching for relief from high property insurance rates, labeled the No. 1 economic development issue for the Mississippi Coast at a forum on Thursday.
Rates for both wind and fire insurance, plus flood policies, are drastically increasing as climate change leads to more intense natural disasters, including flooding, stronger hurricanes and wildfires. Because insurance rates are affecting economic development, the Gulf Coast Business Council on Thursday spotlighted the issue through a policy forum at Mississippi Gulf Coast Community College in Gulfport.
Speakers included insurance agents, a mitigation specialist, an economic developer and representatives of the Mississippi Insurance Department.
While people may think their insurance rates should remain stable because they haven’t filed any claims, that’s not how the market works, one speaker explained. The insurance market is global, meaning insurance rates reflect the totality of disaster losses, not just those in a specific location.
As climate disasters become more intense, insurance companies, and the companies that insure them, are becoming more finicky about the risk they’ll cover.
The National Centers for Environmental Information, a division of the National Oceanic and Atmospheric Administration, says preliminary information shows losses have exceeded $1 billion each so far in 2023 for 25 climate or weather disasters in the United States. By comparison, the average number of annual disasters from 1980-2022 was 8.1.
“We’re seeing higher wind rates, higher fire rates, higher liability rates,” said Angelyn Treutel Zeringue, president of SouthGroup Insurance Services.. “The only thing that seems to be going down is workman’s comp.”
Solutions for escalating insurance rates
Property owners can lower their insurance rates by moving away from tidal waters such as the Mississippi Sound, where traditional insurance companies are becoming less likely to offer coverage.
Insurance companies also are becoming more finicky about other hazards that can lead to higher loss claims, insisting that trees be removed if they could crash into roofs and that roofs be replaced after 15 to 20 years.
Alabama, several speakers said, is having some success with a mitigation program that provides grants to fortify homes against high winds. Mississippi offered those grants after Hurricane Katrina, but they’re no longer available. One hope is that the state Legislature will once again provide funding for mitigation grants, with roofs being the first line of defense.
Mitigation specialist Tom Quaka said one study showed that 95% of nearly 17,000 fortified homes impacted by 2020 hurricanes — Laura, Sally, Delta and Zeta — had little to no damage or insurance claims.
Peter Waggoner, public policy director of Greater New Orleans Inc., has been working with the Coalition for Sustainable Flood Insurance as rates for the federal program climb to levels that are unaffordable for many Gulf Coast residents. He highlighted the sharp increases Gulf Coast residents are facing with the new National Flood Insurance Program rating system.
Coast leaders are working with Louisiana and Mississippi congressional delegations to bring down those increases. But even inland states such as Kentucky have experienced extreme flooding that has driven up the cost of insurance and made recovery more difficult.
“This is no longer a coastal issue,” said Mary Martha Henson, deputy director of the Jackson County Economic Development Foundation. “This isn’t an NFIP issue. This is a human issue. This is an economic development issue.”
Concluded state Sen. Scott Delano, who is also a real estate broker, “No matter what happens, we’re in a hard market when it comes to insurance right now.”
