State insurance crisis 'can't be overstated'

Louisiana won't have a special legislative session to address the state's growing homeowners insurance crisis as Florida will do beginning Dec. 12, but Gov. John Bel Edwards and lawmakers believe they can take steps now to trigger relief until the Legislature convenes on its regular schedule April 10, 2023.

First up: Placing $20 million into the Insure Louisiana Fund to attract new private companies to the state or incentivize existing companies to expand their homeowners' property insurance market here by offering grants.

"To me the thing we need to do right away is fund the incentive program," Republican River Ridge Sen. Kirk Talbot, chairman of the Senate Insurance Committee, told USA Today Network this week.

Lawmakers believe they can do that after the Revenue Estimating Conference recognizes available revenue at its December meeting, which could be quickly followed by approval of the Joint Budget Committee at its December meeting

"I think that's a critical first step," Republican Lake Charles Sen. Jeremy Stine said during a recent Public Affairs Research Council webinar.

Louisiana Homeowners are facing dramatic insurance cost increases triggered by the vast damage caused by Hurricane Laura in 2020 and Hurricane Ida in 2021, whether from private insurers or the state-sponsored Citizens, designed as the insurer of last resort for homeowners who can't secure protection in the private market.

"Our state is in a crisis comparable to or greater than (Hurricanes) Katrina and Rita in 2005," Republican Insurance Commissioner Jim Donelon said during the PAR webinar. "There's no overstating the crisis. (Homeowners) are suffering immensely with rate increases."

In some cases, insurance bills are exceeding monthly mortgage payments.

Hurricane Laura and Ida generated a combined 800,000 insurance claims totaling $22 billion, causing eight insurance companies to fail and other companies to stop writing new business below Interstate 10, forcing tens of thousands of homeowners to secure protection through Citizens, a dangerous trend.

The number of customers in Citizens has nearly quadrupled during the past two years to 128,000. By law, Citizens' prices must be 10% above the highest market rate in each parish or the actuarial rate, whichever is higher.

"This is at least as bad as it was after Katrina and Rita," said Jeff Albright, chief executive of the Independent Insurance Agents & Brokers of Louisiana. "It's the worst property insurance market in my 44 years in the industry."

Donelon said the Insure Louisiana Fund attracted five new property insurance companies to Louisiana following Hurricanes Katrina and Rita and believes it could have similar success now.

Gov. John Bel Edwards, who met with Lloyd's of London insurance officials this fall to discuss Louisiana's crisis, told USA Today Network his administration is working with Talbot, Donelon and others to identify legislation to fortify the market. "We want to make the marketplace more competitive, but all of the solutions aren't obvious," he said.

Talbot said he is already preparing for the spring legislative session.

"We have to do what we can to encourage companies to write new business, but we need a comprehensive plan to solve the problem," he said.

Talbot said he plans to file a bill for the spring session to require homeowners and homebuilders to meet "fortify roof" standards for new construction and replacement as part of legislation to strengthen building codes.

Consumers could offset some of the increased cost through a "Fortify Homes" grant program that has been created but not yet funded. It's modeled after a similar program in Alabama.

Donelon said he would like to see the Legislature fund the Fortify Homes program with $20 million used to provide grants of up to $5,000.

"Those are some of the long-term solutions, but they will take time," Talbot said.

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