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Louisiana homeowners are struggling to find affordable homeowners insurance after the virtual collapse of the state’s insurance industry following a series of devastating storms.
It’s a growing problem in many southern states, but nowhere is it worse than Louisiana, where in the past two years more than 20 insurance companies have gone under or left the state, according to fox business.
Louisiana Insurance Commissioner Jim Donelon told the outlet: “We are certainly in a crisis.”
In recent years, Louisiana has been hit by hurricanes and flooding, including areas previously considered lower risk.
A couple checks out their destroyed mobile home after Hurricane Laura in Lake Charles, Louisiana, in August 2020
In August 2020, Hurricane Laura caused catastrophic damage and flooding in Lake Charles and inflicted widespread damage throughout southwestern Louisiana.
Two more hurricanes followed in October of that year, Delta and Zeta, which inflicted further damage and hampered Laura’s recovery efforts.
Then, in August 2021, Hurricane Ida made landfall as a Category 4, killing 33 people in Louisiana and inflicting $18 billion in insured damage across the state.
Last year was a relatively quiet hurricane season, and Louisiana was spared from major coastal storms. However, the state was hit by a tornado outbreak last month, with 21 tornadoes touching down shortly before Christmas.
Many insurers have given in to the weight of claims and are no longer able or unwilling to insure homes in Louisiana.
The average annual insurance premium in Louisiana is more than $2,000 for a home worth $250,000, among the highest in the country and 46 percent higher than the national average, according to bank fee.
Homeowners who cannot find coverage on the private market are forced to use the state’s ‘insurer of last resort’, state-backed Louisiana Citizens’ Property Insurance.
A resident surveys the damage to the Washington Gardens Apartments after it collapsed from the winds brought on by Hurricane Zeta in New Orleans in October 2020
But by state law, Citizens charges above-market premiums so the state doesn’t compete with private insurance companies. Citizens premiums average more than $5,000 annually in at least seven parishes.
Insurance Commissioner Donelon told Fox Business that the crisis in Louisiana has been exacerbated by stress in the international reinsurance market, which essentially offers insurance to insurance companies.
“Our regional industry is supported by the international reinsurance market and that market has been affected not only by our horrible hurricane seasons, but also by Hurricane Ian in South Florida last year, record-breaking wildfires in California and Australia. and record floods in Germany. Donelon said.
“All of those challenges are making insurance much harder to get and more expensive for policyholders in the coastal parts of our state,” he said.
Last week, Louisiana Gov. John Bel Edwards said a special session of the state legislature would likely be held in February to address the homeowners insurance crisis.
Water surrounds homes with tarps after Hurricane Delta in Iowa, Louisiana, in October 2020
Donelon is asking state legislators to put at least $45 million into a special fund to attract property insurance providers to the Pelican State, according to the Louisiana Illuminator.
The proposal would offer public subsidies to insurance companies willing to write policies for higher-risk homes in Louisiana.
Florida, another state that has fought to keep premiums in check and prevent insurers from walking away, passed its own sweeping new law on the subject last month.
That will create a billion-dollar reinsurance pool, provide incentives to avoid frivolous lawsuits and force some customers to switch from Citizens Property to a private insurer, even if the policy costs more.
It will also set stricter deadlines throughout the claims process to try to ensure that homeowners do not face coverage delays.