Experts work to provide flexibility while maintaining coverage         

It’s not perfect, but the cost and impact of commercial insurance in Coast counties is not the negative story that might be expected. Many factors play into the equation for cost, including type of construction, location, no major storms in recent years and wetlands and other environmental issues. But on the whole, commercial insurance seems to be faring better than residential.

“Commercial insurance is pretty robust with plenty of capacity in the state now,” said Andy Case, Director of Property & Casualty Rating for the Mississippi Department of Insurance. “Companies feel they can operate in a fair and competitive environment here. We see plenty of carriers willing to write commercial insurance.”

Case said that at this time commercial insurance is cheaper on the Coast than in other areas of the state. “Wind is wind no matter where it is. We see a difference above Hattiesburg but that could change with a major storm.”

Gulfport native Tom Sawyer, who’s been in the insurance business 53 years, said, “It’s amazing right now. We haven’t had a hurricane in a few years and there are a lot of players in the market. Commercial insurance seems to be at a good point.”

A senior accountant with Brown & Brown—one of the top five companies in the U.S.—Sawyer even sees businesses getting reductions of 25 to 50% on wind storm coverage from last year. “That’s a drastic reduction, depending on the type of construction. I know of a condo in Bay St. Louis that has coverage at 50% less than last year because it’s very well constructed,” he said.

He feels that it’s all about construction. “We’re seeing some active commercial building now with high tech, wind restrictive roofs, steel studs and concrete to get as much wood out as possible,” he said. “Also, agents can help clients get reductions because everyone is cost conscious. People will jump ship mid-term for a reduction. I never recommend buying coverage in a hurry.”

Bill Lavers, Executive Director with the Harrison County Development Commission, does not think the cost of insurance has a great effect on development. “It’s just the cost of doing business. We tell companies to check on the cost of insurance but there is no insurance question on the forms we receive,” he said. “Much of it depends on the location, cost of land, type of business and construction—it all goes into the equation.”

Lavers and HCDC were involved with bringing the state’s only Buckee’s to Harrison County and noted that the company did not ask about insurance. “That was an offshoot for us because we focus on industrial but we’re glad to have the opportunities we have.”

Blaine LaFontaine said that insurance continues to impact existing and new industry recruitment, or relocation, in Hancock County where he has seen premium increases for the majority of industrial or commercial properties managed by Hancock County Port and Harbor Commission at Port Bienville and Stennis International Airport. 

“HCPHC has done our best to mitigate the effects on our tenants by often freezing lease rates or offering lease rates below market value to allow the tenants relief and keep our properties competitive to retain or recruit new business,” the Executive Director/CEO said. “Other factors, such as new methodology with National Flood Insurance Program’s Risk Rating 2.0 system, have also impacted properties at Port Bienville with premium increases for tenants on existing properties. 

“As we manage a lot of new construction, we understand inflation and cost increases on labor, material, supply chain, etc. have impacted new construction on all projects as well which would also justify adjustments to replacement cost and insured values on all properties,” he said.

LaFontaine said whether or not companies ask about insurance depends on the company and type of project. “On existing facilities and lease negotiations, insurance is always a consideration—but not necessarily a key driver for a decision—as lease rates can be offered to offset the insurance expense. Facility infrastructure, site requirements and workforce are often more critical to companies and developers,” he said.

A veteran insurance agent, Angelyn S. Zeringue, President, SouthGroup Insurance-Gulf Coast, says insurance for property is very complex for businesses on the Coast. “If you have a newer building or newer roof, your rate is actually decreasing. For older buildings that have not been recently updated or with a roof over 15 years old, the property insurance rates are getting higher. More insurance companies have entered the Mississippi market and that is helping to reduce rates,” she said.

She has found that property coverage options are expanding. “There is more flexibility for consumers and businesses to choose the coverage options that fit their needs,” she said. “Additional options for wind deductible buybacks work to reduce the outlay required in the event of a loss.”

Twenty-one years out from the devastation of Hurricane Katrina, Zeringue said minimal storm activity over the past few years has definitely improved insurance pricing. “The insurance market has become quite competitive in Mississippi, and most coastal business property policies are benefiting from reduced insurance costs,” she said. “Now is a good time to check around with different companies because good rates are available on property with a newer roof and recent updates.”

Zeringue said that insurance underwriting is stricter for the lower-cost companies. “Inspections are required to identify liability issues, existing damage or wear/tear, and the companies require the policy holders to conform to the recommendations in order to continue coverage under the policy,” she added.

She noted that the Mississippi Legislature is working to fund the Strengthen Mississippi Homes Program which will assist more homeowners to fortify their roofs for better protection. “We need to expand efforts and programs to support improvements to business buildings,” she said. “Our neighbors in Alabama and Louisiana are moving faster than Mississippi to fortify homes and businesses, and we don’t want to lag behind. Stronger structures survive better and reduce repair costs.”