State officials working to bring down homeowners insurance rates by bringing in competition

Published: Jun. 1, 2023 at 2:44 PM CDT|Updated: Jun. 1, 2023 at 6:06 PM CDT
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Lake Charles, La. (KPLC) - After back-to-back hurricanes devastated Southwest Louisiana, many are still concerned about high property insurance rates.

“It’s outrageous, it’s the most expensive other than my house bill it’s sky high,” homeowner Jeff Guidry said. “It’s almost doubled on me.”

David Foster says he’s been making his own repairs to his home because he just can’t afford the high premiums.

“Insurance companies I talked to wanted to combine my homeowners with my business insurance and I just started up a business and what they were quoting me for was more than my income, personal and business,” Foster said.

Louisiana Insurance Commissioner Jim Donelon says the incentive program they have in place will continue to attract more insurance companies to help make prices more manageable for consumers.

“That’s the incentive program to attract companies bringing with it competition back to our market, our property insurance market,” Donelon said. “It worked after Katrina and Rita to the point where for the five years before Hurricane Laura hit our state, we had only a 1% increase per year in homeowners costs for 5 years in a row.”

The Insure Louisiana Incentive Program is a matching plan requiring companies to take the money they receive from the incentive fund and put it towards more policies.

“I believe over the next 12 months we will see companies writing as they did with the incentive program of Katrina and Rita, depopulating our market of last resort of 40,000 policies after that first year that program was implemented,” Donelon said.

Donelon says don’t wait to shop for insurance. If you wait until a storm approaches, it will be too late to secure a policy because companies stop writing policies.

Commissioner Donelon joined us live in the studio this afternoon to answer questions about preparing for hurricane season. You can see the full interview below:

Rate increases

“There’s a suit being brought by the attorney general, supported by a joint concurrent resolution of the legislature urging him to do so. I have provided support for that as well with data that is relevant to pricing of insurance and the regulation thereof, which is done for the flood program by FEMA at the national level.

“With this new rating system, there is much in the dark still about how things have been priced on an individual property basis, rather than a ZIP Code or parish basis, as has been done throughout the history of the program. We are seeing more and more often dramatic increases in costs for those trying to buy new coverage that has not been in place by the previous owner or by the individual himself up until now.”

Know your plan

“You need to be sure that you access still subsidized, even with these increases, the National Flood Insurance Program. I tell folks all over the state, the best insurance buy any property owner anywhere in the state can make is the National Flood Insurance Program. Invaluable to all corners of the state.

“Secondly, you need to know what your coverage is, and importantly, what it’s not, such as your named storm or hurricane deductible. A third of homeowners’ policies come with a 5 percent named storm deductible. Not 5 percent of your loss, 5 percent of your insured value. Typically, that’s $200,000, so you’re out of pocket $10,000 when you have a 5 percent named storm deductible before your coverage kicks in.

“Thirdly, it helps to take your cell phone, videotape all of your contents – your appliances, your furnishings, carpeting, et cetera – before the catastrophe causes you to have to file a claim for either flood insurance or hurricane insurance by your homeowners’ policy.

“Lastly, when you evacuate, take your insurance documents with you to get started sooner rather than later with the claims process from wherever you are located as you’ve evacuated.”

Incentive program

“We have help on the way. Just as what happened after Katrina, Rita, when then-Gov. Blanco created an incentive program that we have basically copied for this go-round. Gov. Edwards and the legislative leadership across party lines were supportive [last year] in appropriating the money to get eight companies writing new business in our state.

“And now in this session, they’re adding $17 million more to that to get us to a total of $62 million, which is the amount that the eight companies asked for, but either they didn’t have the qualifying capital to entitle them to the full amount they were asking, or we didn’t have enough money to get to the $62 million that was being asked by those eight companies.

“They have obligations to write on a formula we don’t have time to discuss here today, but it will result as it did after Katrina and Rita – in that year, 40,000 policies moving from Citizens to the private market. If we can get the full $62 million out this year in the new offering, round two, we’ll get 50,000 policies written by those companies.”