Although three Lamar County fire protection districts have improved their ratings from a Class 8 to a Class 7 last October, residents are not seeing reductions in insurance payments in the Southwest, Southeast and Oak Grove districts.
Lamar County Board of Supervisors President Joe Bounds spoke out about the lack of reduction in insurance payments at the close of last week’s Board meeting in Purvis. He said his insurer wouldn’t even consider lowering payments after the improvements in the fire district.
Lamar County Fire Coordinator George Stevens and State Insurance Commissioner Mike Chaney say some of the larger insurance companies are using a different method to determine rates these days.
“Insurance companies like State Farm are using the grid system already,” Chaney said. When a fire district improves from a Class 8 to a Class 7, you will see a reduction in insurance premiums of about 5 percent. When it goes from an 8 to a 5, it will be about 50 percent.”
As for not seeing a change in insurance premiums, Chaney said, “That is hard for me to say because of the way the insurance companies are defining the coverage. … However, for a fire district to go from a Class 8 to a Class 7 and not see a reduction in insurance rates is very unusual generally.”
Stevens said insurance companies set up grids across the state to get the lowest risk and measured the losses on those grids.
“The Mississippi Rating Bureau, which was created by the Legislature and funded by the insurance companies and governed by the insurance companies, said if you do this, this and this and you’ll get this rating,” he said. “It was pretty straightforward, so we did what they asked. Life is good; you work hard and your rates go down.
“Then they came up and said, ‘We’re not going to do that anymore. Instead of measuring your prevention capabilities, we’re going to see what your losses are.’ They used to say, ‘We’re not going to measure your losses because your community might have a bad year.’”
Stevens said improving fire stations and personnel is the key to reducing premiums in that situation; it was based on losses.
“If you go through Hattiesburg when a tornado comes through, guess what?” he said. “You get a higher loss and your insurance rate goes up. To me, that just wasn’t right. If they make that deal to begin with, that would be OK.”
However, Stevens said he had talked with residents of the three protection districts who have saved a substantial amount with the class improvement.
“One guy said he was saving $700-$1,000 a year,” he said. “I’ve heard $300 on modest homes. It’s not something that you can define rates as easily as you could. They used to say from a Class 10 to a Class 8 would be about 35 percent (reduction in insurance rates). What I think is happening now, I think that 8 rating is not getting as much discount, so you’ve just about to get a Class 7 rating to what you would get with an 8. I’ve heard people say, ‘My rating when to a 7, but my insurance went up.’ What’s happened is the whole rate structure has gone up.’”
Stevens said the Legislature played a big role in establishing volunteer fire departments.
“I’ve been doing this a long time,” he said. “What happened in the 1980s, insurance (costs) shot up enough that volunteer firefighters tried to do something and there wasn’t enough money to do it. The Legislature got involved and they set up a separate account for building fire stations and the counties had to pay the operating expenses.”
The people who own homes and businesses must contact their insurance agents to advise them of the change in fire rating, Stevens said.
“Homeowners and business owners in Oak Grove, Southwest and Southeast fire protection districts need to call their insurance company and inform them that they now have a Class 7 Fire Protection Rating and ask what their savings will be,” he said. “Don’t count on the insurance company to automatically drop the rate. I have found homeowners paying a Class 10 premium for years who should have been getting billed a Class Eight premium.”
Anyone with any questions about the change in fire ratings can contact Stevens at (601) 270-7525.
