Gulf of Mexico
A destroyed home in floodwater after Hurricane Ida in Pointe-Aux-Chenes, Louisiana, U.S., on Thursday, Sept. 2, 2021. The electric utility that serves New Orleans has restored power to a small section of the city after Hurricane Ida devastated the region’s grid.

LA - Climate Change Is Causing an Insurance Crisis in Louisiana

A little over a year ago, Peter Gardner, a Louisiana developer, completed rehabbing an apartment building with 144 units and got a surprise so ugly it made him decide to move his business out of town.

When the project began, his broker estimated the annual cost of insuring it would be $75,000. But by the time Gardner finished it, the insurance cost had risen to $175,000. He paid it, but when he went to renew the policy this past July, he got another shock. The broker now said it was $275,000. An alternative broker could only find policies over $300,000 per year.

Gardner bought his first house for renovation in New Orleans in 1999 when he was still in college. Over the years, he’s tackled roughly 100 projects. He currently owns about 400 apartments that he rents. He survived the downturn after Hurricane Katrina in 2005, but now the market impacts of climate change have become so inexorable that he sees no choice but to start again in another city to the north.

“I’m a business climate refugee, because if I can’t make a profit here, I don’t feel comfortable buying new projects, investing here any further.”

Reeling from four hurricanes in 2020 and 2021 that caused $23 billion in damage, Louisiana is undergoing an insurance calamity that is harming the state’s economy and even reducing its population.

“There’s no question we’re experiencing a crisis in the insurance availability in our state,” said James Donelon, commissioner for the state’s Department of Insurance, who notes the crisis extends not only to property insurance for homeowners and businesses, but also to car and flood insurance, which are sold separately. “It’s certainly causing some people to turn in the keys and give up their homes and to shut the doors on their businesses.”


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Louisiana is not alone in suffering from insurance woes. Rates are going up across the nation, particularly in states like Florida and California, which have been hit hard by climate-exacerbated natural disasters. Florida has a seen a tripling of rates and some of the super rich are complaining of annual premiums topping $600,000. But Louisiana has one of the lowest average incomes in the nation and so the rising costs there are quicker to cut to the bone.

The state is among the top three in the nation which lost the greatest percent of their populations between 2021 and 2022, according to the latest census. Many may have left because of hurricane damage. More than 8% of Louisianans told the U.S. census that they were displaced by a natural disaster last year, compared to a nationwide average of 1.6%.

The root of the problem is climate change. It’s made hurricanes and rain storms that plague the city both worse and more frequent.

“Climate change is driving not only direct losses but also repricing of insurance, mortgage and even utility rates,” says Jesse Keenan, a professor of sustainable real estate at Tulane University.

There have long been endemic issues such as crime, pollution and economic stagnation in the state, said Keenan, but now unaffordable insurance is the breaking point.

Louisiana is the third most expensive state for property insurance, according to Insurify, an insurance comparison-shopping website. They estimated the average cost at $5,353 annually, or three times as much as the national average.

Twelve insurers that write homeowners coverage in Louisiana were declared insolvent between July 2021 and February 2022, according to the Insurance Information Institute.

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