Homeowners insurance may cost more than mortgage in Louisiana

Jerome "Z" Zeringue felt fortunate after his family home in Houma survived Hurricane Ida with $7,000 in damage.

"It could have been so much worse," said "Z", a Republican state representative who saw many of his friends and constituents in Louisiana's Bayou Country lose everything.

But it did get worse, not just for Zeringue but for virtually everyone living along Louisiana's coastal regions.

Many of those who were able to afford to rebuild may not be able to afford to stay because of massive homeowners insurance hikes both in the private market and with Louisiana's safety-net insurance company Citizens.

"It could completely change the face of the lower portions of LaFourche and Terrebonne parishes because people won't be able to afford to live there," "Z" said. "A lot of people are already choosing to relocate. They just won't be able to afford to live here."

Though Zeringue never filed a claim on his property insurance - he had an $8,000 deductible - his private company dropped him after Hurricane Ida.

Zeringue's insurance agent told him Citizens was his only option, which would raise the cost of his annual homeowners policy from $2,300 to $9,000.

"I told him I was just going to have to risk it; I wasn't going to pay $9,000," said "Z", who was able to take that risk because his home doesn't have a mortgage. "We finally found a policy in the private market, but it still more than doubled our cost to $4,500, and that's with the highest deductible and bare minimum protection."

Since then, Citizens' board voted to increase its rates by another whopping 63% beginning Jan. 1, 2023 once Louisiana Insurance Commissioner Jim Donelon signs off on the rate hike.

More homeowners are being forced into Citizens after seven insurance companies failed following Hurricanes Ida and Laura and other companies stopped writing new business below Interstate 10 after a combined 800,000 claims totaling $22 billion.

"In the aftermath of Hurricanes Laura and Ida companies have pulled in their horns," Donelon told USA Today last week.

The property insurance hikes combined with new federal flood insurance increases could create an economic storm that threatens homeownership in southern Louisiana as much as Hurricanes Ida and Laura have over the past two years.

"It is truly, as you know, a crisis out there," Donelon, a Republican, told members of the Louisiana Legislative Joint Budget Committee last week.

Citizens is considered Louisiana's insurer of last resort, a quasi-government company created by the state to provide property coverage to those who can't secure it in the private market. By law, Citizens' prices must be 10% above the highest market rate in each parish or the actuarial rate, whichever is higher.

Citizens' customers have more than tripled to about 106,000 during the past two years with about 500 more being added daily.

"In my 44 years in the insurance industry I've never seen a property insurance crisis like this," said Eugene Montgomery, a member of the Citizens board who is also president of the private Community Financial Insurance Center, which has offices in Baton Rouge and Monroe.

"Some people's insurance payments are going to be larger than their mortgage payments," Montgomery told USA Today this week.

Donelon presented a plan to the Joint Budget Committee last week that he believes could lure private insurers back into the market, which could lower rates and help depopulate Citizens.

He wants lawmakers to approve a $20 million incentive program he hopes will entice private insurers into the market or prompt those already here to lift their moratorium on new policies.

Donelon's plan would create the fund from money already being collected by his department but currently being deposited in the state's general fund.

It's unclear whether his plan can be approved by Democratic Gov. John Bel Edwards and the Joint Budget Committee or whether it would have to be presented to the full Legislature, which doesn't come back into session until next spring.

"If it can be done it's definitely something we should consider," said "Z", who chairs the Joint Budget Committee as well as the House Appropriations Committee. "It's a mess."

"Z" said he expects an answer to the question within a couple of weeks.

In the meantime, he said, "we just have to pray we don't have another storm."

"God help us if we get another major event," he said. "It would be complete devastation."

Greg Hilburn covers state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1