Volatile Louisiana insurance market may keep premiums up

After a string of devastating storms since 2020, 11 insurers have become insolvent and nearly dozen more have withdrawn from the state. Meanwhile, Louisiana Citizens Property Insurance Corp., Louisiana's insurer of last resort, is expecting big premium increases this year, state officials have said.

At least one local agent believes the impact of the new fire rating will be minimal because premiums may rise from broader risks in the Louisiana marketplace.

"It's a little help, but it's not that much," said Brad Bourg, president of Bourg Insurance, which has offices in Baton Rouge, Chauvin, Donaldsonville and Prairieville.

Parish officials said this week that the Property Insurance Association of Louisiana lowered the Prairieville-area fire district's fire insurance rating to the association's second-best classification, falling from a Class 3 to a Class 2.

The rating is on a 1 to 10 scale, with 1 being the best.

The fire district's rating has gradually changed from a Class 5 to a Class 2 since the Prairieville district was formed in the mid-2000s to support a paid force and gained its own dedicated property taxes to supplement parish-wide sales tax dollars, fire officials said.

The 35-square-mile Prairieville district encompasses much of the fast-growing northern end of Ascension's east bank, including the Dutchtown area. The last population estimate for the area was around 42,000 residents, officials said.

Mark Stewart, chief of Fire District No. 3 in Prairieville, said the latest improved rating stems from a combination of continuing upgrades, including better water service, expanding 911 dispatch services and the growth of the fire department.

"We've steadily been improving," Stewart said.

The Prairieville department has 60 to 65 firefighters and has amassed five stations. The latest was finished in 2017, a $1.4 million station at Bluff and Alligator Bayou roads. Another is being eyed for farther south on Bluff, Stewart said.

Insurers use the PIAL ratings for marketing, underwriting and pricing homeowners and commercial property insurance, but officials at the association declined Tuesday to say what kind of rate impact the new classification could mean for insurance rates in Prairieville.

Rate impact questions were referred to local insurers. In a statement, parish officials pointed out that state law "mandates that better fire district ratings translate into savings on property."

Qualifying that every insurer uses different methods to calculate risk and set rates, Bourg estimated that the improved rating in Prairieville would amount to a 1% decrease in premiums but that improvement would probably be overcome by rising rates due to other factors.

Bourg said assessments of the risk from wind damage, the overall reduction in competition in the insurance market, and the rising cost of reinsurance are driving up insurance rates in Louisiana after the state's recent round of storms.

Reinsurance is a kind of insurance that insurers buy from big underwriters like Lloyd's of London to help cover their risk.

The loss of insurers has driven people to Louisiana Citizens Property Insurance Corp. It is expected to see premiums rise by an average of 63%, state regulators have said.

Stewart said he advises residents and business owners to let their insurers know about the new fire rating. He suggested that even if some insurers say this fire rating change won't mean much in the way of premium savings, the district's improvements have saved homeowners over time.

"Even if it isn't a lot from a (Class) 3 (rating) to a (Class) 2, it's a lot from a 5 to 2," Stewart said.

Check here to see if you are in Fire District No. 3.

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