Chaney closes door to State Farm’s proposed 45% rate increase – a screen door to let AIR in and out

During those “months”, Chaney will receive a report from AIR Worldwide.

Mississippi Insurance Commissioner Mike Chaney and wind engineering firm AIR Worldwide have agreed to terms on a contract on a cost/benefit study required by the Mississippi Legislature leading to development of a hurricane wind damage mitigation.

AIR  – a member of the ISO Family of Companies – said it will also recommend the best ways to encourage use of these features in both new and existing structures, by providing incentives in property insurance premiums and education about the return on investment in mitigation.

“This is a very important first step in protecting lives and property in Mississippi,” Chaney said. “Once the specific requirements for Mississippi are established, we can begin to implement further steps in individual homes if funding becomes available. Not only would the property be more wind resistant and safer for the occupants, but this will lead to significantly lower premiums in the hurricane areas.”

Big-I has a game plan. Will it work?

When State Farm proposed the rate increase, Sop posted Lets give them the Chaney without vaseline - an interesting thought since State Farm is  really sticking it to people in Florida.

Kurt Bressner spent more than $16,000 installing storm shutters, a reinforced garage door and an impact-resistant front door on his Boynton Beach home. In return, he got more than peace of mind.

Effective this year, he got a $5,362 break on his annual insurance premiums.

Now, Bressner — and more than 700,000 other Florida consumers who spent big money to fortify their homes — could see their “wind mitigation” discounts dramatically reduced.

Insurers, led by State Farm Florida, are complaining that the discounts for installing shutters and other protections have become so popular that they are undercutting the industry’s bottom line.

Last year, citing the cost of the discounts, State Farm asked for a 47.1 percent rate increase. The state said no, but the Legislature agreed to review how the discounts are tallied. The first public hearing is Wednesday in Tallahassee.

Bressner thinks it is “counter-intuitive” for insurers to want to strip away incentives that encourage policyholders to make their homes better able to withstand a windstorm.

State Sen. Mike Fasano, R-New Port Richey, who serves on the Senate’s banking and insurance committee, recalled State Farm’s president testifying on behalf of the discounts.

“This is what they wanted and this is what they got,” Fasano said.  “Now they want to take away [the discounts] from homeowners. That’s a promise they’ve broken.”

No one can argue with the benefits of mitigation; but, not everyone can afford to make the costly improvements.  With the experience in Florida as evidence of the eventual outcome, public money spent on mitigation is just another public subsidy for the insurance industry.

Instead of relying on a member of Big I’s “family” for recommendations, the Commissioner should convene a group of construction experts in the State and rank the various mitigation options.  Some of the least costly options may be just as effective as those that cost the most.

One potential problem is that the various computer models that insurers and reinsurance companies base their rates on value mitigation credits differently, said Jack Nicholson, executive director of the Florida Hurricane Catastrophe Fund and a commission member.

The way homeowners put in for their hurricane discounts is also the subject of some wrangling.

Homeowners who make improvements must have an expert — an architect, engineer or building inspector — certify that the work was done. Those inspection reports are then turned in to insurers to trigger the discounts…

Bressner, whose job as Boynton Beach city manager requires him to be away from home during a hurricane, spent $16,600 to make sure his home could withstand a powerful storm. He knew firsthand about the dangers — his roof was wrecked by Hurricane Wilma…

Safety was the main goal, Bressner says, “but the premium reduction was a very nice savings to the bottom line.”

Now, it looks like he might take a direct hit, not from a storm, but from the people who insure him against one.

Forewarned, forearmed; to be prepared is half the victory.