Insurance is a way to provide protection against loss. Since the risk of loss is only a probability—usually a very low probability—insurance is often called risk management. Since individuals have risk of loss in many parts of their lives, a number of types of insurance exist. The most common lines of insurance are life, automobile, flood, marine, health, property, accidental death and dismemberment, worker’s compensation, and unemployment compensation. As protection for risk, insurance dates back to the Babylonians, more than four millennia ago.
The Mississippi Insurance Department is led by the commissioner of insurance, one of the six statewide elected state officials. In 2014, Mississippi’s insurance industry comprised 2,253 firms with over $12.5 billion in premiums written.
In 2014, 379 companies wrote life insurance policies in Mississippi. Premiums totaling over $1.7 billion were written, with almost $750 million benefits paid. The three firms that wrote the highest percentages of life insurance were Southern Farm Bureau Life Insurance Company (5.5 percent), State Farm Life Insurance Company (5.2 percent), and Metropolitan Life Insurance Company (4.1 percent). Each of the remaining companies wrote 4 percent or less of the state’s policies. Fifty-five companies wrote zero.
Also in 2014, 230 companies wrote annuity policies in Mississippi. Premiums totaled almost $1.5 billion, and more than $328 million in benefits were paid. The four firms that wrote the highest percentages were Jackson National Life Insurance Company (9.2 percent), Lincoln National Life Insurance Company (7.1 percent), Pruco Life Insurance Company (6.2 percent), and Variable Annuity Life Insurance Company (5.9 percent). None of the remaining companies wrote more than 5 percent of policies.
Six health insurance companies wrote policies in Mississippi in 2012. More than $615 million in premiums were written, and almost $505 million in losses were paid. The four companies with more than a 4 percent market share were Magnolia Health Plan (32.5 percent), Windsor Health Plan (30.2 percent), United Health Care of Mississippi (21.1 percent), and HealthSpring of Tennessee (10.1 percent).
Property/casualty insurance was written by 824 companies in Mississippi in 2012, with almost $4.4 billion in premiums written and more than $2.3 billion in losses paid. The three largest companies for this insurance line were Mississippi Farm Bureau Casualty Insurance Company (8.7 percent), State Farm Mutual Automobile Insurance Company (8.4 percent), and State Farm Fire and Casualty Company (6.8 percent). None of the remaining companies had more than a 3 percent market share.
In addition to traditional corporate, profit-seeking companies, insurance protection can be provided by private associations, usually based in member-owned trade or occupational groups. Nine of these fraternal companies operated in Mississippi during 2012: the Order of United Commercial Travelers of America (67.3 percent) and Assured Life Association (23.0 percent) had the bulk of the business. Other fraternal companies included Woodmen of the World Life Insurance Society, Royal Neighbors of America, Thrivent Financial for Lutherans, Knights of Columbus, United States Letter Carriers Mutual Benefit Association, Independent Order of Foresters, and Modern Woodmen of America. None had more than a 3.5 percent market share, and they collected only $31 million in premiums and paid only $10 million in losses.
Mississippi’s insurance industry was severely affected by Hurricane Katrina, which hit the Gulf Coast on 29 August 2005 and caused substantial damage in the southern portion of the state and totally devastated the coastal margin. Less than a month later, Hurricane Rita wreaked further havoc. Business-as-usual losses were completely overwhelmed by hurricane-related losses. The Mississippi Insurance Department has calculated Katrina-related damage at $125 billion and insured losses at $45–60 billion. By 1 August 2006, 483,693 insurance claims related to the two storms had been filed in Mississippi, and insurers had paid out more than $10.5 billion. Of those totals, 236,372 claims and $7.6 billion involved coastal Hancock, Harrison, and Jackson Counties.
One issue that arose in the storm-related claims was whether wind or water caused the damage. Homeowner policies cover only wind-caused damage; to obtain coverage for water damage, homeowners must purchase separate policies from the Federal Emergency Management Administration’s National Flood Insurance Program, and many Mississippians had not done so. Many insurance companies argued that damage had resulted from the storm surge (water) rather than from the wind and denied claims on that basis. In addition, many of those with flood policies discovered that they were capped well below the amount of the damage.
In the wake of 2012’s Superstorm Sandy, rate hikes proposed by the National Flood Insurance Program threatened to exacerbate the still unresolved post-Katrina insurance concerns of Mississippi Gulf Coast residents. In response, the Mississippi Insurance Department filed suit against the program in 2013, with five other states filing supporting briefs. In April 2014, reacting to Congress’s passage of the Homeowner Flood Insurance Affordability Act, the department withdrew its lawsuit, though it retained the right to refile if the Federal Emergency Management Administration’s implementation of the new legislation fails to meet Mississippians’ needs. Because of legal controversy and the losses connected to Katrina, some insurance companies are refusing to issue new homeowner policies in Mississippi. More than a decade after the storm, the greatest difficulty for coastal Mississippi reconstruction and redevelopment remains adequate and affordable insurance.
- Mississippi Insurance Department website, www.mid.ms.gov
- Liam Plevin, Wall Street Journal (4 May 2007)