The Louisiana Property and Casualty Insurance Commission is a panel created by statute and made up of members from diverse backgrounds representing government, consumers and members of the insurance industry. The panel exists to propose changes and improve the state’s insurance market. To this end, the Commission reviews and investigates issues affecting the availability and affordability of property and casualty insurance and prepares a report covering its findings. I reviewed the latest report, which covers 2019 and 2020, and I found it interesting how much has changed since the last report was released.
The points regarding home owner’s insurance noted the market situation in December 201
9. The points were as follows:- The voluntary market remains competitive after its re-establishment after 2005.
- The market is stable with 28 new insurers writing in Louisiana since 2005.
- Citizens’ residual market share of the homeownership market decreased from 9.8% to 0.4% since 2008—a 95% decrease in homeownership market share since 2008.
- A statewide average market-wide home insurance premium increase of just 1.6% in 2019, after 0.7% in 2018.
- Louisiana ranked first in the average cost of homeowners insurance in 2017 at $1,968; Florida ranked second at $1,951; Texas ranked third at $1,893, according to the latest NAIC data.
- The homeowners’ rate increases from 2008-2017 were at a slightly lower rate (40.1%) than the national average (45.9%) during that period.
Obviously, we are sitting in a completely different place today. December 2019 was before Hurricanes Laura, Delta, Zeta, and Ida, and the devastating losses they created had yet to occur. A new report covering 2021 and 2022 has not been released, but we can anticipate some of the pretty drastic changes it will show.
First, there are currently few insurers writing policies in Louisiana. Louisiana lost nine insurance companies to insolvency and many more decided to stop writing new insurance in the state or pull out altogether. This means that Louisiana Citizen’s market share will certainly have increased. The statewide average premium increase will undoubtedly have increased as well. We know that LA Citizen’s has already been approved to raise its homeowner’s property insurance rates by 63% effective January 1, 2023. As for where Louisiana ranks nationally in terms of average cost, it’s hard to imagine why we would have lost the top spot 2021 and 2022, even with the storms this year in Florida.
So what is the point of this exercise? 2019 was a different time for the Louisiana property insurance market. Many people use the word “crisis” to describe the current state of property insurance in Louisiana. Personally, I find it useful to be reminded that things were not always as they are now. Circumstances change, new opportunities are created and the market will look different again.
The Louisiana Department of Insurance issued Regulation 125, Insure Louisiana Incentive Program, on November 9. The program offers incentives in the form of cash grants to qualified property insurance companies with the goal of encouraging additional insurers to write in the state, increasing competition and taking some of the pressure off Louisiana Citizens. The program is not perfect, but it is a step in the right direction, and Commissioner Donelon should be applauded for his efforts.
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