Two years after Hurricane Ida, a slow trickle of insurance and federal money for repairs

Two years after Hurricane Ida made landfall, just before noon on Aug. 29, 2021, the Category 4 storm's lingering impact is still being felt across the 25 Louisiana parishes in its path.

Though Ida didn't result in the kind of cataclysmic levee failures and flooding that made Hurricane Katrina such an historic disaster, its timing, a year after hurricanes Laura, Delta and Zeta, meant the combined effect on the insurance market was almost as great. Ida by itself was one of the most expensive storms in Louisiana history, with an overall economic impact estimated at $75 billion, according to the National Oceanic and Atmospheric Administration.

The hardest hit areas were in Terrebone and Lafourche parishes, where the combined population of about 200,000, or about 77,000 households, suffered insured damages of almost $3 billion, an outsized portion of the $14 billion that Ida cost insurers across the state.

"I don't think there was a home in Terrebone that didn't have some kind of damage," said Chris Pulaski, head of planning and zoning for that parish.

The Louisiana Department of Insurance's final estimates put insured losses elsewhere at:

Orleans and Jefferson parishes combined -- $4.7 billionSt. Charles and St. John the Baptist -- $2.3 billionSt. Tammany and Tangipahoa -- $1 billion17 other parishes -- $3 billion.

When Ida's costs are added to the $10.5 billion cost to insurers from Laura, Delta and Zeta, the 2020 and 2021 hurricane losses almost equal Katrina's $25.3 billion insured losses.

A wave of claims

As the wave of Ida claims came flooding in, 11 insurance companies declared insolvency. A dozen more pulled out of the Louisiana market altogether, and at least 50 stopped writing new business in hurricane-prone parishes, according to the Insurance Information Institute, a nonprofit industry watchdog.

As a result, insurance premiums soared where home and business owners could even find coverage. Louisiana Citizens Property Insurance Corp., the state-run insurer of last resort, has grown from 35,000 policyholders to 128,000 over the past two years, according to the Insurance Department.

Michel Leonard, the Insurance Information Institute's chief economist, said that whereas Florida's insurance market turmoil in recent years had much to do with fraudulent practices, Louisiana's trouble was mostly down to insurers being under-capitalized and not having enough reinsurance to withstand claims.

In an effort to shore up the market and bring down premiums, Louisiana Insurance Commissioner Jim Donelon secured $45 million earlier this year to offer insurance companies incentives to return to the state. It's been slow going so far.

"Donelon acknowledged that the approved grants are only the first step toward potentially bringing down homeowners' insurance rates," said Leonard, adding that more structural changes will be needed. Among them: letting insurers derive premiums from what they expect in a climate change-driven world, rather than only from past events.

"To the best of our knowledge, we have not yet heard of any state that has moved from backward-looking to forward-looking rate setting," Leonard said.

Bailout fund swamped

Meanwhile, for people trying to get their homes and businesses repaired, the insurance turmoil has meant delay and uncertainty.

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Pulaski, the Terrebone planning chief, said that while many thousands of his fellow residents have suffered much worse damage, his own struggle to claim insurance for repairs to his house in Houma reflects the common issues.

Hurricane Ida landed two trees on his house, which meant the roof had to be replaced at a cost of $115,000. Six months after the storm, his insurance company, Southern Fidelity, finally agreed to pay. But before contractors could be lined up, Southern went bust.

"So, now I have Citizens. But that's a new policy and they won't pay out on an old claim, so I had to go to LIGA," Pulaski said, referring to the Louisiana Insurance Guaranty Association, the state bailout fund that is financed by a levy on insurance companies.

The bailout fund, which normally has a staff of just a dozen employees, was overwhelmed by the insurance crisis and struggled to keep up. They have also been pushing back on claims such as Pulaski's, arguing that they won't necessarily approve higher payouts just because labor and materials costs have risen 30% since a claim was approved.

The hardest hit

Then there were property owners with insufficient insurance or none at all. They now largely rely on government programs to help them recover.

Louisiana was allocated more than $3.1 billion in federal community development block grant disaster recovery funds to cover all the storms of 2020 and 2021.

That money is divided among 14 programs that target homeowners, small businesses, local governments and others. Claiming that money is a notoriously lengthy and laborious process, and only a fraction of it has been spent so far.

Pat Forbes, executive director of Louisiana's Office of Community Development, said about 4,000 grants have been processed for $300 million under the main home-building program, Restore Louisiana. That's less than half the $680 million in the fund.

There is also about $900 million in grants available in programs to build affordable housing, none of which has been spent.

"We try not to make it slow," Forbes said, but he added that there is an unavoidable process that can mean years before grant money translates into new housing, particularly affordable rental housing where the need is most acute.

A long wait

"It has to go through a competitive procurement process. Then there's all the environmental reviews" for the federal government, Forbes said. "Then, developers have to go and pay architects and engineers to design the things and then build them. That can take 18 months, two years, more."

There is a similarly lengthy process for economic development grants for parish governments to spend on things such as repairing schools and replacing community centers lost to the storm.

Kristi Lumpkin, Lafourche's director of economic development, said the parish has been allocated barely $9 million under the Hometown Revitalization program to spend in low- and moderate-income areas to restore public facilities. She said Lafourche is still waiting on a cooperative endeavor agreement from the state before it can proceed. Then there are "very strict" U.S. Department of Housing and Urban Development guidelines about what projects qualify for the money.

She said Lafourche expects it won't see money from that program until May 2025.