Mississippi Insurance Commissioner Mike Chaney says he should decide soon whether State Farm can boost homeowners' rates in three coastal counties.
The three counties took the brunt of Hurricane Katrina's battering storm surge and howling winds in August 2005, and Chaney says home insurance and affordable housing remain serious challenges there more than four years later.
He temporarily denied State Farm's request in September, saying he needed more information from the company on why it believes the increase is justified.
Chaney says he's gotten that information but still has misgivings about the amount of the increase.
"I can't see the justification," he said, but added, "We're negotiating with them, and we're going through the process."
He wouldn't say what he would consider a more acceptable increase rate.
State Farm spokesman Roszell Gadson defended the increase and its amount, saying it's what the company needs to effectively do business in Mississippi.
"Like any business, State Farm has to have enough to cover the number of policies that we've taken on," he said.
In June, State Farm announced it would start writing new homeowner policies in all Mississippi counties except Harrison, Hancock and Jackson.
State Farm had stopped writing new policies in February 2007 as it was dealing with a mountain of claims and legal challenges from homeowners affected by Katrina. A few exceptions were put in later.
Chaney approved a 13.8 percent increase for State Farm policyholders statewide in 2008 and has said it's too soon for another, especially one with an average rate of 45 percent.
He and Gadson indicated negotiations on the latest proposed increase are going smoothly, although Chaney said he isn't entirely satisfied with the information State Farm has provided since he issued the temporary denial.
"We continue to work with the (state Insurance) Department to find a solution," Gadson said. "It's in his court."
Chaney says insurance rates generally are stabilizing along the Mississippi Gulf Coast but added it's tough to predict how long that will last, as more insurance companies could seek increases and another major storm could drastically affect what homeowners pay and what insurance companies charge.
But he's encouraged that about 40 new insurance companies have started writing policies in Mississippi since 2008.
Even with the uncertainty that surrounds insurance rates in an at-risk area for hurricanes, the greater competition more insurance companies bring can make a significant dent in what homeowners pay, he added.
"The more companies that we can bring in to spread the risk," the better it will be for policyholders, he said.