As Louisiana insurance rates keep climbing, Jeff Landry 'frustrated' with lack of progress

With rising homeowners insurance rates reaching crisis levels in Louisiana, Gov. Jeff Landry said he's frustrated that the industry-backed package of bills he signed this year have not shown results, saying the industry needs to come to the table to deliver real savings to homeowners.

Rates for homeowners insurance have increased by 6% so far this year on average, according to Louisiana Department of Insurance data. The increase comes after two years of spikes more than double that amount that thrust Louisiana into a crisis, which has infiltrated the housing market and pushed some coastal communities to the brink.

The continued climbing of rates raises further questions about whether the state can do more to stave off the steep increases, with some housing advocates and state leaders calling for a bigger investment in fortified roofs, stronger building codes and other measures to help protect homes from storms.

Landry, a Republican who took office in January, has convened lawmakers for three special sessions – on redistricting, crime and taxes – but hasn't convened one for the insurance crisis.

In an interview, Landry said he's open to holding another special session on insurance, but he has not seen a package of bills that would fix the problem. He called on insurers to offer up solutions that would lead to savings for homeowners.

Landry's comments reflect a widening rift between the governor, who has opposed a push to weaken plaintiffs' ability to sue, and insurance companies newly emboldened by Insurance Commissioner Tim Temple, a former insurance executive.

High insurance costs have morphed into a full-blown threat for communities across south Louisiana, and risky places around the country from California to Florida. Dozens of local homeowners have told the Advocate | The Times-Picayune that rising insurance costs are driving them to leave their homes, or they are planning to leave or worried they won't be able to find a buyer.

Landry said he's miffed that the package of bills pushed by the insurance industry that he signed in the spring hasn't brought relief yet.

"I feel completely frustrated," Landry said. "It leads me to believe the things the insurance companies told the commissioner of insurance, told the lawmakers, don't seem to be coming to fruition."

Landry also said he supports some ideas offered by housing and consumer advocates, like guaranteeing certain levels of discounts to homeowners who put a fortified roof on their home. Temple, a fellow Republican, and other GOP leaders have shot down such legislation in the past.

While Temple supported bills to limit insurance companies' exposure to lawsuits, Landry, who has support from prominent members of the trial bar, said insurers wouldn't get sued if they didn't delay and fight claims made by homeowners. And the governor said he's open to a federal solution to the insurance crisis, given the global nature of the business that ties Louisiana premiums to reinsurers in London and Bermuda.

"I'm open to anything," Landry said. "I'm as frustrated as other citizens of the state. I pay those high premiums as well. What I've learned…if you just listen to the insurance companies like they did in Florida, it's a disaster."

"It's time for them to come to the table and say if we do X, they're going to do Y."

Waiting for change

Temple ushered in a series of changes earlier this year that allow insurers more flexibility in raising rates and dropping policyholders. The commissioner said that while the package hasn't yet lowered rates, he's still confident the changes will work by generating more competition in the market. And he said rates are starting to "moderate" following years of steep increases.

"We didn't get here overnight," Temple said in an interview. "We're not going to get out of it overnight. But we are going to get out of the crisis. I still firmly believe that based on everything I'm seeing."

Temple has also called for the Legislature to hold a special session on insurance, and he hopes lawmakers will hold one before the regular session in April. Some state lawmakers have privately discussed holding a special insurance session in the coming months, according to three people familiar with the talks, but it's unclear whether the idea will gain traction.

"No one is expecting improvement and most are bracing for steep increases," said Rebuilding Together New Orleans CEO William Stoudt, referencing the homeowners his nonprofit serves. "Six percent might be the state average, but we continue to hear of double digit increases. The general feeling is it will get worse before it gets better."

Concerning data

While homeowners in the state saw rates increase by 6% on average so far this year, the changes vary widely. Factors that affect them include where people live, who their insurer is and what type of risk their house has. Insurers have been particularly interested in the age of roofs, and some have hesitated to insure homes with roofs older than 5 or 10 years.

Data released by the U.S. Senate Budget Committee as part of an investigation into the nation's insurance crisis shows Louisiana has been at the tip of the spear for insurers dropping policyholders, a dynamic that has caused upward pressure on costs.

Insurers canceled a larger share of policies in Louisiana than any other state besides Florida in 2022 and 2023, according to the probe. And nine south Louisiana parishes, including Orleans and Jefferson, were among the 100 worst areas in the U.S. for those years, with rates that were three-to-five times worse than the national average.

As insurers withdrew from risky markets like Louisiana, tens of thousands of policyholders flocked to Citizens, the insurer of last resort that charges higher rates by law. The remaining private insurers hiked rates dramatically, a trend that has not yet gone away.

Lawmakers agreed to a bill in the spring to temporarily suspend the 10% higher premiums that Citizens policyholders pay, which means rates that otherwise would have increased again statewide will dip slightly, according to Citizens data.

From 2020 to 2023, Louisiana policyholders on average saw a nearly $1,000-a-year increase in home insurance premiums, according to data from researchers at the University of Pennsylvania and University of Wisconsin. That was second-most in the country, behind only Florida.

State rate filing data shows rates continued to increase this year. State Farm raised rates this year on its Louisiana homeowners insurance customers by 9% on average, affecting more than 300,000 policyholders. Filings also show AllState hiked rates by 11% on 85,000 policyholders. Liberty Mutual affiliate SafeCo hiked rates by 30% – the biggest rate hike in the state.

A spokesperson for State Farm, which has the biggest market share in the state, declined to answer specific questions about why the company hiked rates again, saying it is looking for ways to maintain "competitive rates."

"These rate changes are driven by increased costs and risk and are necessary for StateFarm to deliver on the promises the Company makes every day to its customers," said spokesperson Roszell Gadson.

Liberty Mutual, whose affiliate SafeCo filed the 30% increase, declined to comment.

People generally saw "fairly large" increases when they renewed their policies in the first half of 2024, partly because they were the result of rate hikes that began in 2023, said Ben Albright, head of the Independent Insurance Agents and Brokers of Louisiana. Some increases slowed down in the second half of the year, but they varied widely.

Rate decreases are still the exception to the rule, though some agents have reported seeing them for the first time since the crisis began, Albright said. He expects 0-10% increases through early next summer.

"I am optimistic that a few new companies entering the market in January will add some downward pressure and we may see decreases become more common next year, but I'm not ready to start telling people to expect a decrease, just yet," he said.

The home insurance industry broadly is still paying out more in claims than it is taking in through premiums in some markets like Louisiana where risk is high, said Mark Friedlander, spokesperson for the industry-backed Insurance Information Institute.

Friedlander pinned the cost hikes in hurricane-prone states on inflation, losses from severe weather and expenses from litigation.

'No choice'

There's broad agreement in Louisiana that the state needs to better fortify homes with the highest risk of wind damage and flooding to remain insurable in the long-term.

One step the Legislature has taken to encourage better building standards is allocating a collective $45 million since last year to a grant program to put fortified roofs on people's homes. But the state lags far behind Alabama, which started a similar program much earlier.

Stoudt's nonprofit has landed some funding to install fortified roofs. But he expects significant changes in the future to allocate more money to people who can't afford to put a stronger roof on their home. He also suggested the state could mandate certain discounts for fortified roofs, which Alabama does.

Meanwhile, many are whittling down their homeowner's insurance coverage – and some are dropping coverage entirely – to manage huge premiums.

"Customers have had no choice but to increase deductibles and lower coverage to offset burdensome rate increases," Stoudt said.

Along with proposals to continue funding the fortified roof program, Temple said he is open to legislation to strengthen Louisiana's building codes and their enforcement. He said fortified roofs are the future of an affordable home in deep south Louisiana. And he expects to bring legislation on better building code enforcement next year, either in a special session or the regular session in the spring.

"The citizens of Louisiana deserve to have a special session on insurance reform," Temple said. "It's still the crisis everybody has been dealing with. The Legislature has had a special session on criminal reform, on tax reform. The citizens deserve one on insurance reform."

Editor's note: This story has been updated to clarify the proposed change to fortified roof discounts.