The Press in Mississippi | The disaster insurance puzzle

(Bay St. Louis, Mississippi) Don Thorp arrives at the same time as me at the Hancock County Historical Society. The former US Army helicopter pilot plays the false modest role of the concierge. But just from the way he sits, you can see that the man is sure of what he is doing.

“Bay St. Louis was founded 20 years before New Orleans, by the same Montrealer: Bienville,” he told me, handing me three leaflets. Mr. Thorp often visited Quebec, having lived in Vermont, before coming to spend quiet days on the Mississippi coast.

In 1699, the two Le Moynes, Jean-Baptiste and his older brother Pierre, “d’Iberville”, arrived in this cove of the Gulf of Mexico. Three hundred and twenty-five years later, we cannot blame them for settling here, even if the Creole Creole was not yet open. Nor to have left for other adventures: everything is a little too calm in this semi-tropical town. For a millennial walking down the main street skateboard in front of the antique stores, we pass five retirees in golf carts and a municipal police SUV.

“It’s not a good idea to come and steal here,” Don told me with a smile that mixed warning and security pride.

What disturbs the local calm is not the delinquents, but an issue that has barely been addressed in this electoral campaign: climate change. At least, if we trust the scientific data. Because Don Thorp laughs when I talk to him about the impact of human activities on the frequency and intensity of weather phenomena.

“In the 1960s, they said we were entering a new ice age. It’s rubbish, let’s see. »

He laughs less when I talk to him about insurance.

The Thorpes have two properties on Ocean Boulevard which, as its name suggests, offers a splendid view of the blue waves. “The main house has been on the market for a year,” he says, and the cost of insurance is part of the problem. He himself has insurance against floods, another against wind damage and a third, general, for the house.

The hurricane Katrinain 2005, which remains the most devastating in American history, was a game-changer for all coastal communities, from Florida to Texas, including Alabama, Mississippi and Louisiana.

The damage was so considerable in Louisiana that several insurers have since declared bankruptcy or stopped insuring homes altogether in certain states. In Florida, the insurer Farmers folded last year, leaving 100,000 customers in the lurch.

The insurers who remained have constantly increased premiums, in line with the increase in risks and the reduction in competition. Reconstruction costs have also increased, so much so that insurance in several regions has doubled, tripled or quintupled in around ten years.

Elected officials reacted with a series of measures. The federal government offers a universal flood insurance program. Several states, including Mississippi, offer a last resort program against natural disasters, to compensate for the desertion of insurers.

But one of the reasons for the abandonment of several risky markets by insurers is precisely the intervention of the State: many prohibit increasing premiums by more than 10% per year. These increases being considered insufficient, many prefer to look elsewhere.

An investigation by two academics¹ revealed that premiums are not always linked to the degree of risk. Many communities at low or moderate disaster risk have very high premiums. Particularly (but not only) because the market in these states is unregulated, so insurers spread the costs to higher risk areas in these markets.

Socialism with variable geography

“What we should do is force all building owners in the United States to pay for catastrophe insurance. If we had to pay $100, say, there would be a huge pool that would cover everything: fires in California, hurricanes in Florida, tornadoes in Kentucky, floods…

— But… are you a socialist, Don?

– No ! I’m a little to the right of Attila the Hun. For me, the worst words in the English language are: “We are the federal government and we are coming to help you.”

—So why would someone in a town in Vermont pay to protect you from hurricanes because you decided to live by the ocean?

— How many floods have there been in Vermont? In the last five years, they have been flooded non-stop. Every week proves that every state in the United States is at risk of a natural disaster. »

Interesting how having $3 million worth of beachfront real estate makes you a collectivist on catastrophe insurance, but not on health insurance.

“It has nothing to do with it,” he told me.

I point out to him that the ancients were not going to plant their house in front of the waves to look at the sea…

” Exactly ! Nobody had insurance before. If you couldn’t afford to lose your house, you didn’t build by the sea. When they made the programs, people started building houses worth millions of dollars. If I didn’t have insurance, would I have built a $1 million house on the ocean? Not sure. »

Scientists have measured ocean level rise all over the U.S. coast, and the data is pretty staggering. But even people who have lived here for 50 years don’t see it, even when they are not climate skeptics. An increase of 15 centimeters is almost imperceptible to the naked eye.

What is visible is the aftermath of the disaster. Disasters of the magnitude of Katrina, Ian or now Helene give rise to an almost unmanageable number of complaints. And an equally gigantic volume of litigation before the courts.

Melissa Geisel, 45, remembers that day in August 2005 well. Her home in Bay St. Louis, two miles from the beach, was not in a flood zone. The water came from the river behind. Eight meters high. The 2.5 m piles, obligatory for all new construction, were of no use.

“My father is a shrimp fisherman, and he had tied his boat on purpose so that it rose with the water… We came out through the attic, my parents, my children and 22 dogs…”

She experienced a classic case of dispute between insurers.

“They wanted us to sign a paper to say that the wind was not the cause… The trees were moving in all directions! There were dead fish, squirrels, birds in my house afterwards… It took me five years of therapy just to be able to talk about it without crying. Since then, I no longer take out home insurance, it doesn’t give me anything. »

Kaira Veals had to evacuate the 70 elderly people from the home where she worked.

The insurance company initially denied compensation, saying the water did not enter through the roof, which was the insured portion.

A study from the University of Louisiana² stated in 2023 that 17% of home owners had their insurance policy completely canceled due to the insurer deserting or excessively increasing the cost of premiums.

“There is no safe haven from disaster,” Matthew Stieffel, a broker at Coldwell Banker Alfonso in Bay St. Louis, told me. When we see the damage of Helene even in the mountains of North Carolina, a place we thought was safe, we can no longer know. One thing is certain, here, before buying a house, studying the costs of insurance is as important as the inspection of the house.

“But as much as we talk about hurricanes, the lure of the oceanfront is still incredibly powerful. »

It is therefore through the protection of property rights that ardent supporters of the free market have now come to demand universal home insurance.

This is no small irony, in this country which is the only one in the OECD without a universal health insurance system.

1. Read an article from New York Times (in English; subscription required)

2. Check out a study from the University of Louisiana