After years of disastrous hurricanes, insurance firms are abandoning the region, leaving tens of thousands of southerners without home insurance.
This insurance dilemma revolves around the state of Louisiana.
In the past two years, over twenty companies have ceased operations or left the state, causing hundreds of thousands of families to pay higher premiums or go without coverage.
Jim Donelon, Louisiana’s insurance commissioner, stated categorically that a crisis exists.
According to Donelon, the issue began in 2020 when Hurricane Laura struck Lake Charles. The state was then struck by hurricanes Delta and Zeta, followed by another significant hurricane, Ida, in 2021.
“After Laura and Ida, 800,000 claims were filed, resulting in insurers paying $23 billion for insured losses,” Donelson stated.
However, bad weather in Louisiana is not the only factor driving increasing prices. Donelon demonstrates that the global impact of record-breaking natural disasters is significant.
“Our regional industry is supported by the international reinsurance market, which has been impacted not only by our terrible hurricane seasons, but also by Hurricane Ian in south Florida last year, record wildfires in California and Australia, and record flooding in Germany,” Donelon explained. All of these obstacles make it far more difficult and expensive for policyholders to obtain insurance in the coastal regions of our state.
Currently, the average annual premium for homeowner’s insurance in Louisiana exceeds $2,000. This is 46% over the national average. People are compelled to acquire policies from Louisiana Citizens Property Insurance, the state’s “insurer of last resort,” because firms are leaving the state or putting a stop on writing new business. This year, the average premiums for citizens insurance in at least seven parishes have increased to around $5,000. Citizens’ prices are statutorily fixed above market rates, preventing the state from competing with private insurers.
Donelon stated, “We do not want to put the state in the insurance business.”
While last year’s hurricane season in Louisiana was relatively quiet, several families are still healing from devastating tornadoes.
Just days before Christmas, 21 tornadoes ravaged the state, with the majority striking rural areas.
Gail Bradley of Killona was among the dozens of people hurt by the storms. Charlotte Lewis, her sister, reports that she is still healing.
“She was pinned down by her entertainment center for approximately thirty minutes while screaming and pleading for assistance,” Lewis added.
Thankfully, assistance arrived, but Bradley must now fix up to $60,000 worth of damage on her own. Lewis states that after Hurricane Ida, her sister’s home insurance became unaffordable.
Lewis stated, “She is a retired person with a fixed income.” “She cannot afford insurance, and when she tried to purchase it, no one was here to accept her payment; they had all left.”
Now, the family is doing everything possible to restore Bradley’s property so she can return home.
Lewis stated, “I don’t want my sister to see this mess when she returns home.” “We want to demolish the house immediately because I know that if she sees it in this condition, she will be crushed.”
The state is focusing on multiple insurance crisis solutions. Donelon explains that one of the state’s desired solutions is a more immediate one: an insurance incentive scheme that would provide millions of dollars in incentives to companies that commit to conducting business in Louisiana.
Donelon stated, “We did this after Hurricane Katrina, and it was very successful in attracting new businesses to our state.”
Through the Louisiana Fortify Homes Program, the state is also providing homeowners with long-term funding to reinforce their roofs. The state of Alabama created a comparable program in 2011 and has assisted over 3,000 families in the last decade in better protecting their homes.
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