Experts note no immediate relief in sight
Property insurance is probably not a popular topic for property owners these days, as costs are rising across the country and state. Taking a look at insurance costs for condominiums in the three coastal counties, where most of the state’s condos are located, presents a sobering scenario due to several factors, the biggest being their vulnerability to hurricanes.
Andy Case with the Mississippi Insurance Department said, “Because condominiums are connected you’re taking on your own risks as well as someone else’s. There’s added coverage and costs due to different exposure with perils and shared walls.”
Case, director of the Property and Casualty Rating Division with the MID, said there’s plenty of coverage in the state but it’s different on the Coast.
“We have a company requesting a 35% increase across the state. Do they need that much? We want to make sure it’s fair but adequate because we need them to stay in the state.”
He pointed out that for every dollar collected by insurance companies, they paid out .81 until 2023 when they paid out $1.07. “The reinsurance they paid was significantly higher so they must decide how much risk they want to take or pull out of the state,” he added.
Ian Cross with Pyron Coastal Insurance in Biloxi said, “Although we are specifically discussing condominiums, this is not the only type of business that is being impacted by rising premiums. Hotels, motels, churches, office buildings, grocery stores, etc. are all being increased or being heavily underwritten by the insurance companies. As an independent insurance agent we are seeing this with almost all of our carriers.”
But Cross said the good news is that the state still has an insurance market while other coastal states are not as favorable.
“Most every carrier is stating we most likely will not see any huge relief until next year as the reinsurance market, specifically for wind and hail, is driven by the number of claims and potential for claim payout,” he said. “However, an active hurricane season with claims in the continental U.S. will impact their ability to soften up on the premiums.”
Gulfport resident Kim Savant is secretary for the Heritage Place Homeowners Association and has watched the insurance industry change in the past three to four years.
“Catastrophic losses worldwide have caused the reinsurance costs to skyrocket and brokers are being very selective in what they accept as risks,” he said. “In the past everyone looked at casualty insurance as a necessity they could buy from several sources and most buyers never even looked at what was driving the costs. Now that insurers are being higher risk averse, the costs are skyrocketing.”
Savant lists risks as proximity to the Mississippi Sound, the type construction used, and the age of the buildings as contributors to ever increasing premiums. Now some premiums are doubling and even tripling.
“Our broker options have been limited with many companies declining to even quote us a premium. I don’t believe condos are any more affected than other structures, but factors cause higher risks,” Savant said. “Some condos on the beach are all mostly concrete and steel and high rise and most have the ground floor as auxiliary uses which mitigates some of their flood risk.”
Realtor Stephanie Cowart with Coldwell Banker Alfonso Realty also lists the mitigating factors condominium associations are facing including locations in the three wind zones in the bottom three counties.
“The farther north you get the more availability for markets wanting to insure condominiums,” she said. “The rising costs have definitely played a role in slow condo sales. Buyers have limited funds when purchasing. Retirees on a set budget might not be able to afford the dues on top of buying. Some have moved into our area from other parts of the country and have sticker shock. Certain required covenants within some associations are also a factor, such as not allowing short or long-term rentals.”
Diamondhead realtor and past president of the Mississippi Association of Realtors Jon Ritten agrees that increasing homeowner dues are a problem as associations are more challenged to find insurers. “We’re seeing it all over the Coast,” he said. “Sales have slowed quite a bit with fewer second homes. It’s the affordability factor, but Mississippi is still more affordable than Florida and Alabama. However, the gap is narrowing. Dues and assessments are rising along with the fear factor of hurricanes.”
