Stephanie Grace: New year, new worries about insurance in Louisiana

Just before the calendar flipped to 2023 last week, I joined a club that I didn't really want to join. I became a customer of Louisiana Citizens Property Insurance Co., the state-run insurer of last resort.

At least I've got company. By late last year, the Citizens rolls had swelled to 129,000, with more surely to come on board as 2023 progresses.

My story is like lots of other people's. After years of dutifully paying my prior homeowner's insurer for a policy with such a high named-storm deductible that I got nothing to fix my Hurricane Ida damage, the company announced it was abandoning Louisiana and its customers here. Citizens, which is by law required to charge higher-than-market rates, was the lone option on the table, so I signed up.

I know things could be worse. My cost increase for the year is about $1,600, which is sure not fun but also not backbreaking. If I'd waited until January, I would have been subject to the 63% price hike recently approved for policyholders. Next year could bring even worse news, though, as Insurance Commissioner Jim Donelon has predicted yet another increase if the state insurer can't shed a bunch of the new policies it's taking on.

I bring all this up not to seek sympathy, but because I long ago lost count of people I know who are in the same boat.

If it's not you, it's surely someone in the southern part of the state that you know, probably plenty of people. The big companies, the ones that keep airing those infuriating television ads suggesting they're actually willing to do business with viewers, are in fact trying their best not to; their game is to minimize market share in hurricane-prone areas in this age of more frequent and more powerful storms. The smaller companies that Donelon has aggressively recruited over the years to fill the void — like my now-former insurer — are going under or calling it a day with alarming frequency.

That's an existential crisis for our state, one that should have the full attention of the politicians running for reelection or seeking offices in the big fall elections.

I'm not so sure it does. It's early, but so far I feel like I'm just hearing a lot of the same old, same old.

There's a new move, spearheaded by state Rep. and possible gubernatorial candidate Richard Nelson, R-Mandeville, to revive the warmed-over idea that Louisiana's modest income tax, not other high costs of living here, is the reason for outmigration. Never mind that, while Texas, Florida and Tennessee have no personal income taxes and are growing (they get the money to pay for services through other forms of taxation) every other state in the South has a higher top marginal tax rate, according to the Tax Foundation. That includes places that regularly attract new residents such as North Carolina and Georgia.

The big business lobbyists are starting to talk about insurance, but as usual, they're zeroing in on lawsuits. They point to Florida's experience rather than Louisiana's and suggest — as they did in the drive for tort reform that promised but hasn't delivered lower car insurance rates — that cracking down on litigation is somehow the key. They ignore, though, that lawsuits are often the only resort for homeowners lowballed by their companies, and that exposure to increased hazards is playing a huge part in insurers' calculation of whether to play in our market.

What we really need to hear is a plan to keep people from being priced out of their homes.

Donelon, a Republican and true believer in the private market, is pushing for a new incentive program to attract smaller companies, a project he pursued somewhat successfully after hurricanes Katrina and Rita in 2005 sent companies fleeing. There's money in the state coffers to make it happen; it'll be up to the Republican legislative majority to act, whether or not they agree philosophically with putting public money to such a cause.

The same old talking points aren't going to cut it for people facing vast increases in insurance costs, from New Orleans all the way to Lake Charles, or unable to sell because insurance for potential buyers is so high. And all this is on top of higher costs for federal flood insurance imposed through FEMA's opaque new Risk Rating 2.0 system.

This is what's on my mind as a Louisiana homeowner at the dawn of 2023, and what I'd like to hear the candidates for public office discuss.

Both the headlines and the numbers make me think I'm far from alone.