America's Wetland Foundation

GULF COAST STATES UNLIKELY TO MERGE INSURANCE POOLS

By: America's WETLAND Foundation | 6.1.2012

    GULF COAST STATES UNLIKELY TO MERGE INSURANCE POOLS
       States don’t want to assume each other’s larger risks, insurance commissioners say
 
NEW ORLEANS – To reduce rates, homeowners in coastal areas need to build higher and stronger, insurance commissioners from Louisiana and Mississippi said Wednesday at the America’s WETLAND Foundation’s Blue Ribbon Resilient Communities final forum in New Orleans.
 
As participants from Alabama, Mississippi, Louisiana and Texas met to form recommendations that AWF will issue to local, state and federal policymakers, insurance costs was a key part of the discussion.
 
Louisiana Insurance Commissioner Jim Donelon said insurance rates are based on pooled risks within a region, and, since insurance is regulated by individual states, the risk pools are wholly within a state.  A larger pool area would help to reduce costs, but “it’s not going to happen,” he said.
 
The reason is that states don’t want to take on each other’s risks, Donelon said. Texas and Florida are hit with more hurricanes than the other coastal states, and they have the highest insurance rates in region. Louisiana comes in third in both categories.
 
“Alabama doesn’t want to take Mississippi’s greater exposure; Louisiana doesn’t want to take Florida’s and Florida doesn’t want to take on Texas’,” Donelon said. “You are not going to get two states to share the risks because of this domino effect.”
 
Mississippi Insurance Commissioner Mike Chaney said his home state has just 91 miles of coastline.  In the seven years since Hurricane Katrina, only about 200 of the previous 7,000 homes along U.S. 90 have been rebuilt.
 
Both Louisiana and Mississippi adopted stronger state building codes that have the potential to reduce rates.
 
“The issue for us is to build a stronger house, build higher, don’t build in the wetlands, don’t build in the flood plain, and you will have lower rates,” Cheney said.
 
“Complying with more stringent building standards can reduce rates by 20 percent, said Donelon.”
 
The AWF’s Blue Ribbon Resilient Communities initiative took the wetlands restoration advocacy group to 11 Gulf Coast Communities from South Padre Island in South Texas to Orange Beach, Alabama over the past 15 months.  A final report of recommendations will be issued to the White House, the U.S. Department of the Interior’s Gulf Coast Ecosystem Restoration Task Force, congressional delegations of the four America’s Energy Coast states, state and local officials.

“The next step is the action step,” said Lt. Gov. Jay Dardenne, honorary chair of the Blue Ribbon Resilient Communities initiative.  “People must realize they must come together to reach solutions that are based on science.”
 
John Hankinson, the executive director of the U.S. Gulf Coast Ecosystem Restoration Task Force, said the group reports to New Orleans-native Lisa Jackson, U.S. Environmental Protection Agency Administrator.
 
“I hope to have some entity in charge of Gulf Coast restoration,” Hankinson said, noting that regulation is now divided among many state agencies.  His task force is working to further define restoration goals. “We are making some progress, even though the challenges are huge.”
 
Val Marmillion, AWF’s managing director, said state and local governments are going to have to start take the lead if the coast is to be protected and restored, because the federal government is slow to act.  “The calvary is not coming,” he said. “We must begin acting on our own to protect ourselves.”
 
Among the recommendations that the approximately 75 participants reached consensus on Wednesday are:
 
--Challenge and eliminate conflicting federal policies that can lead to time and cost overruns.
--Unlock U.S. Harbor Maintenance Trust Fund monies for their intended purposes.
--Assess federal mitigation requirements for coastal restoration projects that are rebuilding land that has been lost.
--Urge the U.S. Army Corps of Engineers to place higher priority for restoration, beyond  just focusing on flood protection and navigation channels.
--Assess the federal mitigation process to pool mitigation funds for coastal restoration, adjust mitigation and streamline process to avoid barriers and cost overruns for environmentally beneficial projects.
--Ensure multiple lines of offense, including seeking system solutions.
--Adopt a federal emergency or general  rule to expedite coastal restoration.
--Reconnect the Delta with the upper river for coordinated awareness and action.
--Provide incentives for land restoration, including beneficial use of carbon, for private investment.
--Practice “no net loss of culture” in restoration projects.

The America's WETLAND Foundation manages the largest, most comprehensive public education campaign in Louisiana's history, raising public awareness of the impact of Louisiana's wetland loss on the state, nation and world. The America's Energy Coast initiative works to sustain the environmental and economic assets of the Gulf Coast region. The initiative is supported by a growing coalition of world, national and state conservation and environmental organizations and has drawn private support from businesses that see wetlands protection as a key to economic growth. For more information, visit www.americaswetland.com or www.futureofthegulfcoast.org.