Insurance crisis could hasten young talent exodus in Acadiana

When Natalie Briggs bought her first house in the summer of 2021, she made it a priority to keep costs low. Briggs, 32, hunted down a deal in Lafayette's Saint Streets neighborhood and locked in a low interest rate, aiming to keep her monthly mortgage on par with her previous rent payments.

But within a year of closing on her home, Briggs lost her homeowners insurance policy when Florida-based Weston Property & Casualty Insurance Company folded last summer, impacting more than 10,000 Louisiana policyholders.

Finding a new policy caused her premiums to double, from $1,100 to more than $2,200 a year, sticking her with a surprise bill of about $1,000 from her escrow account in December.

It's a similar story for Cayla Zeek, a self-employed artist searching for a new policy to insure her home in the LaPlace neighborhood following the collapse of United Property & Casualty Insurance Company, also based in Florida, in recent weeks.

UPC announced plans to withdraw from Louisiana in December, leaving its policies to expire on their existing schedules in 2023. But the company was placed into liquidation by the state of Florida on Thursday, giving Zeek and 30,000 other UPC policyholders in Louisiana roughly until the end of March to find new coverage for their homes.

"The first one I called was Progressive, since that's what I have my car insurance with," Zeek says. "They asked me like a million questions. I answered them all. And it's not until I get to the end of this interview that they're like, 'Oh, we don't cover in your zip code.'"

So far, Zeek has only landed a pair of quotes, one for $2,100 a year and the other for $3,100.

"I know that's probably relatively good, but I was like, 'Oh, this is a jump from the $1,400 that I was paying.' This is bumping up quite a bit."

Tens of thousands of Louisiana homeowners have found themselves facing the same problem as 11 insurance companies folded, 11 more left the state and many others aren't writing new policies in the wake of two devastating hurricane seasons in 2020 and 2021.

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The crisis is most clearly reflected in the increased reliance on Louisiana Citizens Property Insurance Corporation, Insurance Commissioner Jim Donelon said at a town hall in Lafayette in late February.

Citizens is the state's insurer of last resort, a quasi-government operation that offers policies to homeowners who cannot find insurance elsewhere and is required to charge at least 10% more than market rates.

In 2022, Citizens took on 90,000 new homeowners policies across the state, more than tripling its user base and dramatically raising its costs for reinsurance, which helps companies pay claims after disasters.

That led to a 63% hike in Citizens' rates last year and, unless it can offload those policies in the near future, another major spike is coming that threatens to drive residents out of their homes, Donelon warned.

"If we don't depopulate Citizens by 40,000 policies or more … it will go up another 40% or 50% for those 120,000 policyholders that are stuck [with] Citizens, and that's unaffordable," he said. "Literally thousands of people will turn in the keys to their house if that is what's necessary. So it is truly a crisis."

Just as rising insurance costs have compounded with high interest rates to drive up the cost of homeownership in Lafayette and around the state, the crisis' impact on the cost of living in Louisiana threatens to add to the state's long-standing problem with depopulation, raising questions about the long-term resilience of its communities.

"This clearly connects back to big-picture, aggregate population dynamics for Louisiana," says Dr. Stephen Barnes, director of the Kathleen Babineaux Blanco Public Policy Center at UL Lafayette. "We've talked for decades about the brain drain that Louisiana faces, and when you look over the course of decades, we see really limited population growth and pretty steady net out-migration."

"Homeowners insurance, in some ways, is sort of a leading indicator for the broader questions about stability and sustainability of our coastal communities," he adds.

Read the full story at thecurrentla.com