LA - More insurance companies pull out of Louisiana: 'We are in a crisis'
Thousands of folks in the south no longer have home insurance because companies are leaving the area after years of devastating storms.
The state of Louisiana is at the center of this insurance dilemma.
In the last two years, more than 20 companies have gone under or withdrawn from the state, forcing hundreds of thousands of families to pay higher premiums or go without coverage.
“We are certainly in a crisis,” said Louisiana’s Insurance Commissioner Jim Donelon.
Donelon says the crisis started in 2020 when Hurricane Laura hit Lake Charles. Soon after, the state was hit by storms Delta and Zeta, and then another major hurricane, Ida, in 2021.
“800,000 claims were filed after Laura and Ida, resulting in insurers paying $23 billion for insured loses,” Donelon said.
The state is working on several solutions to the insurance crisis. Donelon says one solution the state hopes for is more of an immediate fix: an insurance incentive program that would offer millions of dollars in grants to companies who commit to doing business in Louisiana.
But it’s not just severe weather in Louisiana jacking up prices. Donelon explains that record-breaking natural disasters across the globe are having an impact.
“Our regional industry is backed up by the international reinsurance market and that market has been impacted not just by our horrible hurricane seasons, but also hurricane Ian in south Florida this past year, record wildfires in California and Australia, and record flooding in Germany,” Donelon said. “All of those challenges are making insurance much more difficult to come by and more expensive for policyholders in the coastal parts of our state.”
Currently, the average premium for home insurance in Louisiana is over $2,000 a year. That’s 46% higher than the national average. With companies pulling out of the state or putting a hold on writing new business, people are forced to purchase policies through the state’s “insurer of last resort,” Louisiana Citizens Property Insurance. Citizens’ prices are going up this year with average premiums at about $5,000 in at least seven parishes. By law, Citizens sets its prices above market rates, so the state does not compete with the insurance companies.