As Louisianans face staggering home insurance costs, no immediate relief in sight

A year after Republican leaders ushered in a series of pro-industry changes in a bid to alleviate the home insurance crisis in Louisiana, officials are confronting a hard truth: there are few immediate signs of relief.

Insurance rates are not likely to come down dramatically, at least in the near term.

And while the ongoing legislative session has put the focus on auto insurance rates, many homeowners in south Louisiana still face the threat of losing their homes over high property insurance bills. With homeowners' insurance rates ticking upward for most homeowners since the changes the Legislature adopted last year, lawmakers appear poised to stay the course on a pro-industry strategy.

They've rejected bills this session that would require insurers to reveal more information about their finances and to mandate certain levels of discounts for homeowners with fortified roofs. A broad tax break for homeowners paying high premiums appears unlikely.

The lack of progress has frustrated Gov. Jeff Landry, who is at odds with fellow Republican Insurance Commissioner Tim Temple, the architect of the insurer-friendly plan.

But industry groups and Temple say they are starting to see signs of improvement. A handful of companies have won approval to start writing home insurance policies in the past year. And a handful of companies have filed rate decreases, though an analysis of state data from The Times-Picayune | The Advocate shows that rate increases are outpacing the declines.

Those illustrate an uncomfortable reality for Louisianans: Rates are not expected to go back to what they were before the crisis began in 2022, which Temple acknowledged.

"It's not going to come down as sharply as it increased," he said in a recent editorial board meeting with the newspaper.

Signs of progress?

Regulators believe many insurers in Louisiana were underpricing their products before a series of hurricanes wiped out a host of companies in 2022 and 2023. And the state is increasingly reliant on the global industry of reinsurance that has seen prices soar every year since 2017, in part because of worsening wildfires, hurricanes and other climate change-related disasters.

Still, Temple said that he sees signs Louisiana's market is improving. In town halls, he said he's started hearing recently from more people who have seen their premiums drop. And he noted that he's approved 10 additional companies to start writing property insurance here, saying the resulting competition should drive down rates. Customers who get fortified roofs, in particular, have reported significant savings.

But Temple conceded that most Louisianans should not yet expect falling premiums, saying, "I don't think we're there yet.

Temple also expressed frustration that Landry said last December that he was unhappy with the pace of progress on property insurance. Some of the legislation meant to bring down rates didn't go into effect until January, Temple noted.

Temple touted that eight insurers have filed rate decreases, though the Insurance Department later clarified that three companies have filed for decreases eight times. Still, that outpaces the five total decreases companies asked for in all of 2024.

Of the 10 companies that have become newly licensed to write homeowners policies, four of them won that approval before the package of laws was signed last year. One of the companies told The Times-Picayune | The Advocate it is not writing homeowner policies. The others did not return messages for this story

Most of those companies are rated by AM Best, seen in the industry as the gold standard that indicates the companies are financially sound. But three are rated by Demotech, a rating firm that has drawn scrutiny for rating companies that researchers say are of lower quality.

New market share data shows three of the companies had begun writing policies by the end of 2024: Acceptance Insurance Company, Auros Reciprocal Exchange and Lilypad Insurance Company. They collectively had 0.15% of the market.

Ben Albright, head of the Independent Insurance Agents & Brokers of Louisiana, said he is seeing some rate drops in commercial property insurance, which often leads the market. But he's not yet seeing widespread premium drops in home insurance, though people do have more options for insurers now, he said.

"I am optimistic that the homeowners market is starting to move in the right direction, but I'm not ready to predict that the average consumer will see a decrease on their renewal," Albright said.

'Difficult path'

As lawmakers have continued to embrace pro-insurance industry bills, it appears unlikely that they will pass a broad tax break for homeowners who are struggling with high premiums.

Landry is pushing HB 148 by Rep. Jeff Wiley, R-Maurepas, to give Temple more authority to reject rates for being "excessive," but the bill is unlikely to have any effect in the short term. Temple has indicated he would not use the authority because he already reviews whether rates are backed up by sound math. He argued that rejecting rates arbitrarily would push insurers out of the market.

Another bill by Sen. Royce Duplessis, D-New Orleans, to dole out a tax break for low-income residents to offset premium costs is still alive, recently winning narrow approval from the Senate. SB 235 still must win approval from the House, but it would give low-income homeowners a $2,000 tax credit, capped at $10 million a year.

Rep. Brian Glorioso, R-Slidell, also sponsored a bill to let homeowners deduct their home insurance premium from their taxes. But after fiscal analysts estimated it would cost the state nearly $70 million a year, Glorioso conceded HB 236 has little chance. An even more generous bill by Rep. Edmond Jordan, D-Baton Rouge, also has an uphill battle.

Glorioso, who supported Temple's package of bills last year, said there's little the Legislature can do to bring costs down immediately, absent a tax break.

"I never tell anyone your rates are going to go down," he said. "I hope they will. Realistically, what we're hoping for is to slow the growth rate. It's going to be a difficult path absent some coordination with other states on a reinsurance plan or a federal reinsurance plan."

Watching reinsurance

Insurance companies buy reinsurance to protect their balance sheet much in the same way homeowners buy insurance to protect their house against a hurricane. In effect, they are sending some of the premium dollars they collect to other insurers.

Starting in 2017, when wildfires rocked California, costs for reinsurance rose every year through 2024, according to an index published by the trade publication Artemis. That included a nearly 30% jump in 2023. And those costs get passed down to homeowners, who see higher property insurance bills as a result.

The index forecasts a slight dip in costs this year, in part because a flood of investor capital looking to cash in on the high prices is pushing costs down.

Still, a movement is afoot to set up a federal reinsurance backstop to help lower costs for homeowners amid worsening natural disasters. Greater New Orleans Inc., the region's economic development arm, is lobbying for such a change. They similarly pushed for a flood insurance solution amid problems with the National Flood Insurance Program.

Landry has also raised the possibility that Louisiana may need federal help. Democrats in Congress have introduced legislation to set up a reinsurance backstop, but the idea has not gained traction.

"It's not sustainable given where the reinsurance market is and the larger number of natural disasters we're seeing," Glorioso said. "The only way it's sustainable, to me, is to expand the national flood program and include all natural disasters in it."

Temple's office quietly completed a report in March that looked at the possibility of a multistate reinsurance pool or a catastrophe fund like Florida, which established a multibillion-dollar fund to reimburse insurers for part of their hurricane losses. But the report largely panned the idea, echoing concerns from the reinsurance industry that such a move would concentrate risk in hurricane-prone areas.

Temple has opposed the idea of a federal intervention, saying the private market is capable of delivering affordable home insurance.

Another challenge is the setup of insurance being handled by state regulators. Giving the federal government the ability to step into that role seems politically unlikely right now, said Carolyn Kousky, head of the nonprofit Insurance for Good.

"Not only is there no political support, but much of the capable federal workforce has been eliminated," she said.