Wicker Introduces Bill to Address High Insurance Costs on Gulf Coast

Legislation Provides Tax Relief to Combat High Insurance Premiums

August 1, 2008

WASHINGTON – Saying that one of the biggest obstacles in recovering from Hurricane Katrina is affordable and accessible home insurance, U.S. Sen. Roger Wicker, R-Miss., today introduced legislation to help provide financial relief for Gulf Coast homeowners struggling with the high cost of insurance.  The Coastal Homeowners Assistance Act provides tax credits for homeowners to help recover the cost of insurance premium increases while providing financial incentives to make structural home improvements to protect against future hurricane damage. 

“Although great progress has been made since Hurricane Katrina struck the Gulf Coast nearly three years ago, one of the biggest obstacles in the recovery process is the lack of accessible and affordable homeowners’ insurance,” Sen. Wicker said.  “This legislation would provide immediate tax relief for families facing higher insurance premiums as a result of the storm.  The bill would also provide a tax incentive to encourage homeowners to build and reinforce structures that will protect their homes from future hurricane damage.” 

Key components of this legislation include:

  • One-Time Increased Insurance Premium Tax Credit.  Available to residents affected by any hurricane-related event in 2004, 2005, or 2006 whose homeowner’s insurance premium increased by 100 percent or more.  Individuals would be eligible to receive a one-time tax credit up to $5,000 for an amount equal to 50 percent of their insurance premium increase over a three year period.  EXAMPLE: If an individual paid $1,000 per year for homeowners insurance in 2005 and $5,000 in 2008, that person could claim a tax credit of 50 percent of their $4,000 premium increase.  The tax credit in this example would be $2,000.
  • Hurricane Mitigation Tax Credit.  A tax credit designed to be a permanent part of the tax code.  Residents along the Gulf of Mexico and Atlantic Ocean would be eligible to receive a tax credit up to $5,000 for an amount equal to 25 percent of the cost of hurricane mitigation improvements made to their homes.  EXAMPLE:  If an individual makes $15,000 worth of hurricane mitigation improvements to their home, they could claim a 25 percent tax credit on those improvements.  The tax credit in this example would be $3,750.

As a result of volatility in the private insurance market, many Mississippians are being forced to rely on state wind pools and have seen their insurance premiums skyrocket.  Wicker said that while a more comprehensive solution is needed, his legislation would provide immediate financial assistance until a long-term fix is made.

“A more comprehensive solution is obviously needed, but until we reach that point, this legislation provides short-term, focused relief for Gulf Coast residents struggling to pay for their home insurance,” Wicker said.  “A long-term fix may not happen for another year or perhaps longer.  Mississippians can’t wait that long for relief.  We’re in the middle of hurricane season and people along the Gulf Coast need assistance now.” 

Earlier this year, Sen. Wicker offered an amendment to legislation reauthorizing the National Flood Insurance Program that would have made multiple peril wind and water coverage available under the program.  The amendment was not agreed to, but Wicker said he was encouraged by the acknowledgement of Senate leaders that something needed to be done to address the insurance problem.  “My multiple peril amendment unfortunately didn’t pass, but I believe it helped raise awareness of the need for quick action on this issue,” Wicker said. 

Through the home mitigation tax credit proposal, Wicker’s legislation is also intended to provide financial incentive for homeowners to proactively make improvements to their homes to limit damage from future hurricanes.  The senator said he hoped this provision would help draw private insurers back to South Mississippi.

“An ounce of prevention is worth a pound of cure,” Wicker added.  “I’m optimistic the mitigation efforts encouraged through this bill will help the private insurance market return to the Gulf Coast, which would be a great help for homeowners across South Mississippi.”