Like other Gulf Coast states, Louisiana saw national insurance carriers pull away from the coast -- certainly in the aftermath of Hurricane Katrina in 2005 -- but starting a year prior when insurers began to take note of coastal exposure following an active 2004 hurricane season.

Yet, the property market remains relatively stable, said many in the insurance industry, who are quick to point out the insurance environment in Louisiana has not been politicized like in Florida.

"No governor has made it a major plank of his campaign platform," said Robert Hartwig, president of the Insurance Information Institute. "Politics and actuarial science don't mix."

Learning from its neighbor to the east, Louisiana took a different approach, beginning in 2007, by passing legislation meant to attract new insurers and reduce the size of the last-resort insurer, Louisiana Citizens Property Insurance Corp.

Pre-Katrina, Citizens had about 125,000 policies but grew to become the third-largest insurer in Louisiana with more than 170,000 policies by early 2008. As of March 31, thanks to a plan to depopulate the state-run insurer, it has just more than 127,000, said John Wortman, chief executive officer of Citizens.

"There are about a dozen new companies here as State Farm and Allstate, for example, weren't looking to grow," Wortman said. "Louisiana gave insurers some financial help, required that they take some policies from us and made sure we remained the market of last resort."

American Strategic Insurance Corp. of St. Petersburg, Fla., entered the market early in 2008 with ASI Lloyds Inc. after receiving matching surplus from the Insure Louisiana Incentive Program, which provides qualified insurers who write new property insurance policies in the state matching grants of $2 million to $10 million. Already the insurer is eighth among homeowners multiperil insurers in Louisiana with about $36 million in direct premiums written in 2009.

Executive Vice President Kevin Milkey said ASI initially took out policies from Citizens to get started but no longer plans to. The state is "absolutely friendly toward insurance companies" and the company has not had a problem getting the rate it needs.

"(Louisiana) gets the big picture," Milkey said. "They welcome good, strong companies and regulators understand the exposure and how we need to price that risk."

Dale Hammond agreed insurers have found the regulatory and political environment in Louisiana favorable. The president and CEO of Tampa, Fla.-based HomeWise Insurance Group, which writes many catastrophe-exposed properties to the south, said the rate process is quick and efficient. HomeWise had about $4.5 million in direct written premiums in 2009 after entering the market in mid-2008.

"Right now we can price our product and reinsure it," Hammond said. "As long as we can achieve our margins, I don't see us slowing down."

Louisiana did not hand out money to anyone, restricting its generosity to a "limited group of good, solvent companies that were not going to disrupt the market," said Greg LaCost, regional manager for the Property Casualty Insurers Association of America.

In the meantime, Citizens had time to right itself. With $100 million cash on hand and reinsurance, Wortman said Citizens can handle claims from a $600 million to $700 million storm without an assessment. Citizens made $55 million in profit last year.

"We want to do everything we can to avoid assessments," Wortman said. Citizens was able to accomplish that after hurricanes Ike and Gustav in 2008. All but a handful of claims are closed, and about $315 million was paid out without assessments.

Katrina and Hurricane Rita together cost Citizens about $1.4 billion. Citizens received nearly 66,500 claims from Katrina and about 63,640 are closed -- not an easy task when, following the storm, "the management that was in place at that time was over its head," said Insurance Commissioner Jim Donelon.

Citizens was switching service providers and faced litigation over the bidding process when Katrina struck. Computers were under water. Employees worked out of tents and wrote 60,000 checks manually, eventually running out of money.

"The company couldn't do financials, audits, analysis -- everything was outsourced," Wortman said. Then retired, Wortman was hired in April 2007 by Donelon and turned around the state-run insurer, hiring experienced insurance professionals and installing a new policy and claim system.

Louisiana property is a better risk now than it was pre-Katrina, said Wortman. The levees built after the storm decrease the likelihood of the same event happening again, the worse structures destroyed during Katrina were never rebuilt and new construction must adhere to building codes. The demand is also less in Louisiana than it is in a state like Florida, where construction ran rampant following hurricanes several years ago, Hartwig said.

(By Chad Hemenway, associate editor, BestWeek: Chad.Hemenway@ambest.com)