In a dispute concerning a post-Hurricane Katrina assessment levied by a state-based windstorm pool, the Mississippi Supreme Court recently held that an insurer was entitled to submit revised information pertaining to its alleged overpayment made to the pool, despite the pool’s position that the submission was untimely.

The Mississippi Windstorm Underwriting Association (the “Windpool”) is a statutorily created “insurer of last resort” that provides wind and hail insurance to citizens on Mississippi’s Gulf Coast. Arrowood Indemnity Company was a member of the Windpool, writing property insurance in the state. As a member, Arrowood was required to participate in the Windpool’s expenses, losses, and profits, which was calculated based upon its reported percentages of wind and hail insurance premium writings in Mississippi during the preceding calendar year. Members of the Windpool were subject to additional assessments, based on their participation percentage, if losses in a given year exceeded the pool’s assets. To incentivize insurers to underwrite more difficult risks, members that voluntarily wrote wind and hail policies on the coast received credits that would reduce—or possibly eliminate—their portion of an assessment. Losses arising from Hurricane Katrina depleted the Windpool’s assets, requiring it to issue a substantial assessment on its members. Because the assessment was based on information submitted by each member-insurer, they were given the opportunity to reexamine the data previously reported for the operative underwriting year. Arrowood’s submission failed to claim the appropriate credits available to it by statute, resulting in an alleged $5 million dollar overpayment. Its submission, however, was based on incorrect information provided by the Windpool regarding certain excess policies issued by Arrowood. Accordingly, it requested an opportunity to submit the correct information. The Windpool denied Arrowood’s request on the grounds that the deadline for corrections had passed.

Litigation followed, and the Mississippi Insurance Commissioner and the Hinds County Chancery Court affirmed the Windpool’s decision. On appeal, the Mississippi Supreme Court reversed, holding that the Windpool’s reporting deadline was tolled because its incorrect representation precipitated Arrowood’s incorrect data submission. The Court remanded the matter to the Mississippi Insurance Commissioner for further proceedings. Arrowood Indemnity Co. v. Mississippi Windstorm Underwriting Association, No. 2014-CA-01638-SCT (Miss. June 16, 2016).