Louisiana homeowners could see lower property insurance rates next month
Louisiana homeowners could see lower property insurance rates and more availability within a month after lawmakers approve funding that will be used to attract companies to write more policies along the state's hurricane-ravaged coast, Insurance Commissioner Jim Donelon said this week.
The Legislature overwhelmingly passed a bill during a Special Session in February to funnel $45 million into the Insure Louisiana fund, but the Joint Budget Committee must give final approval at its meeting Friday.
"If all goes well (companies) can be writing policies as soon as next month," Donelon said Tuesday.
Louisiana's property insurance market was thrown into crisis following a rash of devastating hurricanes in 2020 and 2021.
Hurricanes Laura and Ida alone generated a combined 800,000 Louisiana insurance claims totaling $22 billion, causing eight insurance companies to fail and other companies to stop writing new business below Interstate 10.
The lack of availability from private insurers forced many homeowners to the state-sponsored Citizens, Louisiana's insurer of last resort, where they faced a 63% increase beginning Jan. 1. By law, Citizens' prices must be 10% above the highest market rate in each parish or the actuarial rate, whichever is higher.
"We're facing the toughest property insurance market since after Hurricanes Katrina and Rita in 2005," said Donelon, who said the spike in insurance rates is threatening home ownership in Louisiana, where insurance costs now exceed mortgage payments in many cases.
Nine companies have applied for specific grants to participate in the program: Allied Trust Insurance Company ($6.5 million); Applied Underwriters ($10 million); Cajun Underwriters Reciprocal Exchange ($5 million); Constitution Insurance Company ($10 million); Elevate Reciprocal Exchange ($5 million); Gulf States Insurance Company ($3.6 million); SafePoint Insurance Company ($10 million); SafePort Insurance Company ($2 million); and SureChoice Underwriters Reciprocal Exchange ($10 million).
If approved, the companies must match the grants they receive, write at least double the total in new policies and generate at least half of the policies in 37 southern Louisiana parishes.
"It was vital to get this program running to provide relief," Donelon said.
Donelon conceded the program is designed to provide short-term relief, calling it a "tourniquet" until long-term solutions can be enacted.
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He estimated the program would result in 40,000 or more policies being removed from Citizens, where the number of insured has quadrupled over the past two years to more than 100,000.
House Insurance Committee Chairman Mike Huvall, a Republican from Breaux Bridge who advocated for the program, said homeowners statewide will benefit.
"It is attracting new business and competition drives down rates for everybody," he said.
The nine companies have applied for $62 million in grants, more than the $45 million that will be initially available. Huvall said he will seek an additional $17 million for the program during the regular session that begins April 10.
Greg Hilburn covers state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1