With reinsurers seeing profits, can Louisiana expect home insurance rates to drop?

After years of losses, fortunes have changed in boardrooms in Bermuda and London. Reinsurers, who backstop the global insurance industry, are seeing healthy profits.

An extraordinary spate of wildfires, hurricanes and other disasters wreaked havoc on the reinsurance industry for several years, spurring wide-reaching effects that included surging insurance bills for Louisiana homeowners. Reinsurers charged higher prices to homeowners insurance companies, which got passed along to customers.

The steep increases in Louisiana thrust the state into an insurance crisis that's hollowing out hurricane-prone communities and softening the real estate market.

But recent quiet hurricane seasons and the soaring rates that reinsurers have charged have led to unusually strong profits for the reinsurance industry, according to analysts. And with capital flowing freely, the pendulum is swinging back.

Insurance companies who buy protection from reinsurers are seeing huge slides in prices, which have dropped between 10% and 20%, by some estimates.

Their good fortune has raised the possibility that Louisiana homeowners could finally see some relief this year as they renew or shop for property insurance policies.

"Reinsurers have been doing well the past few years after absorbing massive losses for a number of years," said Brian Keefer, CEO of Allied Trust Insurance Company, who recently traveled to London to buy reinsurance. "Beginning in 2025, insurers are now finally starting to do better too. … The ones still suffering are the policyholders. It is their turn now to get lower rates as the reinsurance costs soften."

It's not yet clear how large or widespread rate decreases could be in Louisiana. Many insurers are still hesitant to write policies in south Louisiana, particularly for homes with older roofs.

And while inflation has cooled and the U.S. experienced unusually quiet hurricane seasons in 2024 and 2025, climate change has still scrambled the underlying fundamentals of the insurance business. Insurers are increasingly hesitant to insure places like south Louisiana, which has high exposure to hurricanes that are becoming more powerful because of climate change.

Meanwhile, a yearslong effort by the state's Republican Insurance Commissioner Tim Temple and GOP lawmakers to deregulate the industry has not yet spurred significant drops in premiums, which Temple and lawmakers hope will happen by driving more competition into the market. The dynamic has caused a rift with Gov. Jeff Landry, a Republican who backed a controversial new law last year to allow Temple to reject "excessive" rate hikes, something Temple vowed he won't do.

Temple went to London this month to show reinsurers the state's latest coastal master plan and work on fortified roofs, which was part of a yearslong bid to entice the industry to write more business here. He said the presentation was well received, and that he's hearing insurers are going to get significant savings, in large part because of abundant supply in the reinsurance market.

"Over the last several years, reinsurers have made a lot of money. Some property insurers have made a lot of money," Temple said. "It's time for consumers to share in that."

Year of disaster caused global turmoil

When homeowners pay their insurance premium, usually through their mortgage company, the insurance company doesn't keep all of the money.

Instead, insurers send a significant portion — sometimes a majority — to reinsurance companies, many based in Bermuda and London. Those companies promise to help the insurer pay its claims, particularly if a major disaster like a hurricane or wildfire strikes.

The reinsurance business, which faces far fewer regulations than homeowners insurance companies in the U.S., took a beating after years of wildfires and hurricanes from 2017 to 2022. A recent report by the reinsurance broker Guy Carpenter found the industry took a bath for several years in a row.

"It was a business that was suffering from volatility and broadly poor returns," said David Duffy, president of global clients at Guy Carpenter. "Investors in reinsurance companies were really starting to lose their patience at the end of 2022 and 2023."

In response, reinsurers hiked rates dramatically and pulled back on the risks they were willing to cover.

But reinsurers' fortunes changed in 2023, when profits soared to 22%, according to the Guy Carpenter report. Duffy called the margin "unusually strong." And the windfall is expected to continue, with profits projected to be in the mid-teens for 2024 and 2025.

The amount of capital in the reinsurance industry skyrocketed as a result, reaching record levels in 2026, according to a report released last week by the ratings agency AM Best. The agency said reinsurance prices for property fell by 10% to 20%, reaching levels last seen before the explosion in prices in 2023.

With capital flowing freely in the industry, the balance has swung back in the favor of insurers, Duffy said. More competition is driving down costs.

Part of the equation is the unusually quiet hurricane seasons, Duffy noted. They will not last forever.

"The trend has not been our friend in terms of climate change and the frequency and severity of storms," he said. "The insurers and reinsurers are doing their best to price their risk to a not-excessive profit over the long term."

Cuts on horizon?

Keefer, the Allied Trust chief executive, went to London four years ago after a spate of devastating hurricanes and found reinsurers were charging high rates for protection. The next year, Allied Trust paid $240 million to reinsurance companies for its coverage while only taking in $230 million from premium dollars. The company was going to lose money even if it didn't have to pay a single claim.

Allied Trust started a series of rate hikes on Louisiana policyholders, some by more than 20%.

After years of net losses, Keefer's firm posted a $5 million profit in 2024. And its latest quarterly filings for 2025 show the firm is on track for a banner year, with $16 million in net income through the third quarter. He said the firm is still in a $27 million deficit from hurricane losses in 2020 and 2021.

Earlier this month, Keefer's trip to London went much more smoothly. He found there's more competition that's driving lower costs.

"With the combination of additional capital in the market and a relatively low year (of catastrophe losses), prices are starting to come down," Keefer said. "As buyers of that cheaper reinsurance, we can pass those savings on to our policyholders.

"In fact, effective December 20th, Allied Trust lowered rates 2.3% overall with newer homes with (stronger) roofs going down more than 10%. I would expect another rate decrease later this year after we finalize this reinsurance treaty."

Monitoring rate filings

Temple noted that a 20% decrease in reinsurance prices doesn't mean homeowners should expect a 20% decrease in their premium. And it takes time for reinsurance costs to flow down to homeowners because of the regulatory process.

But he said his office will closely monitor the rate filings to make sure homeowners see the benefits.

Temple said he's traveled to London and Bermuda several times in recent years to create a "buzz" around changes to Louisiana's insurance laws, which have made it easier for insurers to raise rates and drop policyholders. His office has also supported bills to boost enforcement of building codes, something that he's eyeing again this year.

"If you want to get in shape and lose weight … you gotta get on a program and be consistent," Temple said. "We need to be consistent."