‘Insurance is Keeping People From Building’

Biloxi, Miss.—Your credit is good, you make a nice living and you can afford the mortgage payments. So why can’t you buy your dream house?

If you live in Mississippi, a likely reason is the high cost of homeowners insurance.

“It’s accessible, but for the average person it’s not affordable,” said Lee Hedegaard, CEO and general manager of Singing River Electric Power Association, Lucedale, Miss.

Unlike much of the country, where the subprime mortgage crisis is taking a toll on housing sales, Hedegaard said most people in his service territory can afford to buy.

“Here it’s an insurance crisis. Insurance is keeping people from building.”

Just how pricey is it?

“My daughter was just in the market for a larger house, and the quote that she got was $9,000 a year for just the insurance,” said Robert J. Occhi, president and CEO of Coast Electric Power Association, Kiln, Miss.

And that’s inland; along the beach, he said, coverage can run $20,000 to $30,000 annually.

A major issue is wind insurance. Insurers are loath to write new policies for it, forcing many people to turn to the last resort: a state-run “wind pool.”

The Biloxi Sun Herald reported that following Hurricane Katrina, wind pool rates increased 90 percent for homeowners and more than 140 percent for businesses.

“That has slowed the adding of new consumer-members,” Occhi said.

A recent study by the RAND Corp. found that many firms along the Gulf Coast have wound up paying more than double for insurance since 2005, when not only Katrina, but also Hurricanes Rita and Wilma hit. But, as Coast EPA’s Occhi notes, “The developers are still here.”

Source: Michael W. Kahn, Electric Co-op Today

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