Hurricane Ian hit Florida, but Louisiana homeowners will pay

Hurricane Ian made its destructive landfall in Florida, but homeowners in Louisiana will also suffer the impact of the storm through even higher insurance costs and shrinking availability from an industry fleeing coastal regions throughout the USA.

"Hurricane Ian will create further distress for the Louisiana marketplace and any other hurricane-exposed state," said Jeff Albright, chief executive of the Independent Insurance Agents & Brokers of Louisiana. "It will affect both availability and affordability."

That's a sentiment shared throughout the industry.

"Losses from Hurricane Ian will significantly impact rates in Florida and other wind-exposed coastal states," Richard Kerr, chief executive of the Dallas-based insurance distribution and underwriting company MarketScout, told the Insurance Journal.

Many Louisiana homeowners were already suffering insurance sticker shock with dramatic increases before Hurricane Ian's impact has been factored into the market.

Last week Louisiana Insurance Commissioner Jim Donelon approved a 63% rate hike for customers in Citizens, the state's quasi-government safety net company for homeowners who can't secure protection in the private market.

"This is at least as bad as it was after Katrina and Rita," Albright said, referencing two historic Louisiana hurricanes. "It's the worst property insurance market in my 44 years in the industry."

And Hurricane Ian will make it even worse, said Eugene Montgomery, a member of the Citizens board who is also president of the private Community Financial Insurance Center. "Ian will have a ripple effect that will be felt in Louisiana and every other coastal state," he said.

Louisiana's current crisis was triggered by back-to-back Category 4 storms Hurricane Laura in 2020 and Hurricane Ida. Together, they created 800,000 homeowners insurance claims totaling $22 billion, which Albright said equals 11 years of premiums collected in the state.

Hurricane Ian, another Category 4 storm, will exacerbate the crisis.

Early estimates from catastrophe modeler RME project Ian insurance claims between $53 billion and $74 billion, more than double the combined total for Laura and Ida.

"Three Category 4 hurricanes making landfall in the U.S. in three consecutive years is historic," Albright said. "Insurers are coming to terms with climate change and more frequent, more severe storms.

"When insurance companies pay more claims they have to charge more or make a choice to leave the market."

Albright said while hurricanes accelerated Louisiana's crisis, the state's "litigious and hostile regulatory environments are manmade problems" that contribute to the market's fragility and keep large national insurers like Travelers and Nationwide from doing homeowners business in Louisiana.

"If we don't improve our legal and regulatory climate we are not going to attract the kind of insurers we need in Louisiana to solve this crisis," he said.