Thousands of coastal Louisiana residents are in danger of not being able to insure their homes and other property. The last two years have been rough for our coast, which has seen four major hurricanes make landfall and leave behind devastating destruction. This has forced insurance companies to leave town or even run out of money due to an influx of claims. Louisiana Insurance Commissioner Jim Donelon tells me his office is doing all they can to get Southeast Louisiana residents affordable homeowner’s insurance, in part because Southeast Louisiana is worth so much to the rest of the nation.
This is a little bit of deja vu, is it not? Just like after Hurricane Katrina, Louisiana residents are dealing with the same problem of not being able to get their homes or other property insured due to the propensity of devastating storms to our region.
For perspective, Laura, Delta, Zeta, and Ida combined will result in payments of $23 billion. Hurricanes Katrina and Rita - without counting flood damage - also paid Louisiana policy holders $23 billion.
My understanding is that the insurance companies that are no longer writing policies, and those that are insolvent really touch every economic strata of insured property. Is that true?
Absolutely, we’ve had about a half dozen companies that have withdrawn from our market. There’s no telling how many have paused their writing at this time.
Is there any role that your office can play in some of the new underwriting criteria of those companies that have stayed? I'm hearing stories that some of that criteria is fairly onerous.
We are mindful of the huge outcry of unhappiness from those 750,000 claims that were filed during this round of most recent storms. They happened during the pandemic, which affected all aspects of our economy. Then there’s inflation, which spiked the cost of home repairs and labor. We have legislation in the hopper to try to make the system of claims handling more effective, efficient and user friendly.
Do you expect the larger insurance companies to come back to service Southeast Louisiana?
I'm sorry to say that I do not expect them to return anytime soon. For 15 years there has been a withdrawal from coastal exposure by the big national carriers. They like North Louisiana, that's far enough from hurricane damage, but 40% of our state's population live below Interstate 10 and Interstate 12. I tell the folks from FEMA that we have a marsh coastline, and it's full of delicious seafood, oil, gas, refineries and shipping. All those things are vital to not just our state's economy, but the entire nation, and those activities require policemen, teachers, firemen and everything else that is vital to a successful economy. We need insurance for their homes, and it can be done.