A possible tool to 'change the economics' of insurance

When homeowners insurance rates started to soar and insurers began to flee coastal Alabama a decade ago, leaders there set out to try to "change the economics," as a top official from that state's Department of Insurance put it.

Here in Louisiana, we sure like the sound of that.

Alabama's approach was to encourage residents to build new homes or replace existing roofs with fortified roofs designed to withstand extreme winds and weather, suffer less damage from hurricanes and better protect structures from damage caused by water intrusion.

The biggest challenge was the cost, which is somewhat higher than the price of putting on a regular roof. And so Alabama created a grant program to help close the gap.

The results are encouraging, according to a recent story by reporter Sam Karlin. About 6,500 people in Alabama have gotten grants to build stronger roofs, most in the state's two coastal counties.

Even better news is that the state push has helped change the culture by showing residents the value of building stronger.

The Insurance Institute for Business & Home Safety has certified roughly 44,000 structures in Alabama, a sign that plenty of people are making this decision even without the benefit of state aid.

It surely helps that they're getting a break on their insurance bills. Insurers in Alabama are required to offer 25% to 30% minimum discounts to homeowners in coastal areas with fortified roofs.

All of which points to Alabama as a promising model for environmentally vulnerable Louisiana, which is in the midst of a dual crisis of cost and availability.

Outgoing Insurance Commissioner Jim Donelon is one fan of the idea. He pushed a legislative program earlier this year to offer $30 million for roughly 3,000 fortified roof grants. Interest in the program, understandably, was high.

Donelon says companies here are offering similar discounts to those mandated by Alabama.

Whether incoming Insurance Commissioner Tim Temple follows Donelon's lead remains to be seen. An industry veteran and like Donelon a Republican, Temple supports encouraging stronger building practices as a "risk mitigation" tool to bring down rates but has not weighed in on state subsidies.

As Temple, the new Legislature and Gov. elect Jeff Landry tackle the crisis next year, we hope they'll consider every possible tool to provide desperately needed relief to their constituents. We also hope they'll remember that upfront investment - particularly at a time of fiscal plenty like the state is in right now - can pay long dividends for families and whole communities subject to climate change-fueled extreme weather.

Changing the economics so that Louisianans aren't priced out of their homes - by whatever means necessary - needs to be a top priority.

The Advocate