New Orleans to see 'skyrocketing' insurance costs in coming decade, new report says

New Orleans will face some of the biggest increases in property insurance costs in the nation because of increased risk from natural disasters, according to a new study that raises more alarms about the state's insurance market.

An analysis released Monday by the First Street Foundation projects that increased risk from disasters alone will lead to a 200% increase in property insurance rates through 2055 in New Orleans, a bigger jump than everywhere but three Florida cities. When combined with inflation and other factors that put upward pressure on prices, premiums here will "skyrocket" over the next decade, the report said.

Louisiana's insurance crisis came on the heels of several devastating hurricanes and led to the collapse of 12 insurers in the state. Combined with turmoil in the global reinsurance market, escalating rates have stressed communities in the southern part of the state.

The report by First Street, a New York-based nonprofit, projects that areas like Louisiana with the biggest insurance increases could see declining property values as a result. First Street produces climate models used by federal government agencies and lenders.

"Climate change is no longer a theoretical concern; it is a measurable force reshaping real estate markets and regional economies across the United States," said Jeremy Porter, head of climate implications research at First Street. "Our findings highlight the urgent need to understand how rising insurance costs and population movements are transforming the economic geography of the nation."

The reinsurance market, composed of companies around the globe that decide in part how much homeowners in Louisiana pay, has struggled to catch up to rising natural disaster risk because of climate change. In particular, modelers are trying to understand the risks of the most severe types of disasters, such as major hurricanes hitting a densely populated city head-on, like Miami or New Orleans.

The report found that climate risk is reshaping the nation's $50 trillion real estate market, with insurance costs rising faster than mortgage payments. The phenomenon may help drive people to move to less risky places. By 2055, the report projects huge swathes of the U.S. may see property values decline because of rising climate risk, a dynamic that has drawn the attention of Congress.

Louisiana lawmakers and Republican Insurance Commissioner Tim Temple have ushered in a series of changes to make it easier for insurers to drop policyholders and raise rates, saying the changes should allow more companies to enter the market. They expect the resulting competition will bring down rates.

But it hasn't yet produced meaningful lower rates. Meanwhile, homeowners, businesses and even churches continue to struggle to pay elevated premiums.

Temple has said he remains confident the strategy will work, though it may take time.

Insurance is expected to be a central topic of the legislative session this spring, though it's not yet clear what lawmakers will agree on. Republican Gov. Jeff Landry said in a December interview that he's frustrated the series of bills pushed by Temple, which Landry signed last year, haven't shown results. Landry expressed an openness to a federal solution, and said he wants to see more consumer-friendly bills, like requiring insurers give discounts for fortified roofs.