1.30.23 – BATON ROUGE, La.
Thousands of homeowners in the state were left searching for new insurance after several companies ceased providing coverage after damage from recent hurricanes.
Lawmakers in Baton Rouge are set to flood the Capitol building starting Monday seeking to find a solution to the state’s ongoing insurance crisis.
Louisiana Gov. John Bel Edwards has called for a special legislative session to start from Jan 30 and end no later than Feb. 5. Thousands of homeowners in the state were left searching for new insurance after several companies ceased providing coverage after damage from hurricanes in recent years.
To address the crisis, Louisiana lawmakers are considering a plan that would allocate $45 million to an incentive fund to help draw insurance companies back to the state. One of the goals is to incentivize smaller, regional companies to come back which could help bring premiums down for all residents.
While lawmakers and Edwards hoped to address the situation during the regular legislative session in April, Donelon said it couldn’t wait. In order to attract insurance companies to Louisiana, they would have to get reinsurance, which is coverage bought to help ensure they can pay out claims. However, companies need to get reinsurance ahead of hurricane season, which starts June 1.
Senate President Page Cortez and House Speaker Clay Schexnayder, both Republicans, supported Edwards’ decision to call the special session.
Critics say the incentive fund is not a long-term solution to the crisis. Royce Duplessis, the Democrat state senator for Louisiana Senate District 5, called the fund a “bandaid approach.”
“I am of the firm belief that even if we move this money to this incentive fund, it will not be the cure-all,” Duplessis said. “It will not be what saves us from this insurance crisis. It will just be a small stopgap, band-aid approach to try to attract companies to come in.”
Duplessis added that the state does not need “fly-by-night companies” that do not deliver when residents are in need.
Donelon told The Times-Picayune | New Orleans Advocate that seven insurance firms have already said they would be interested in the incentive fund. Five of those companies are already licensed to operate in the state.
Louisiana continues to be plagued by insurance woes, with insurers leaving or going out of business in the hurricane-stricken state. Following a series of damaging hurricanes in 2020 and 2021 — Delta, Laura, Zeta and Ida — more than 610,000 residential property claims were filed in Louisiana, according to Louisiana Department of Insurance data. As a result, property insurers have paid out $18.4 billion in claims as of June 30. About $11 billion of that total was paid to homeowners.
But as claims piled up, at least 11 insurance companies that wrote homeowners policies in the state have gone insolvent. Five of the firms left behind about 26,000 claims for the state’s bailout program to close out. In addition, at least a dozen other companies have withdrawn from the state, either by canceling existing policies or announcing they won’t renew them.
The situation has resulted in thousands of families paying higher premiums or moving forward without coverage.
Although Louisiana was spared from devastating storms last year, the state has seen hurricanes making landfall more frequently and leaving paths of destruction.
In addition, Hurricane Ian — although much of the damage was in Florida — is expected to have an effect on insurance outside of the Sunshine State. Many of the companies writing insurance policies in Louisiana are based in Florida, which has struggled to keep the insurance market healthy since 1992, when Hurricane Andrew flattened Homestead, wiped out some insurance carriers and left many remaining companies fearful to write or renew policies.
The Associated Press contributed to this report.