Thousands of homeowners across the state have had to look for new insurance after several companies dropped coverage after damage caused by recent hurricanes.
BATON ROUGE, La. – Lawmakers in Baton Rouge will flood the Capitol building starting Monday in a bid to find a solution to the state’s ongoing insurance crisis.
Louisiana Gov. John Bel Edwards has called for a special legislative session to begin Jan. 30 and end no later than Feb. 5. Thousands of homeowners across the state have had to look for new insurance after several companies have canceled coverage following hurricane damage in recent years.
To address the crisis, Louisiana lawmakers are considering a plan that would allocate $45 million to a stimulus fund to lure insurance companies back into the state. One of the goals is to incentivize smaller, local businesses to come back, which could help lower premiums for all residents.
While lawmakers and Edwards hoped to address the situation during the April regular session, Donelon said it couldn’t wait. To lure insurance companies to Louisiana, they would need to buy reinsurance, which is insurance coverage purchased to ensure they can pay out claims. However, companies need to reinsure ahead of the hurricane season, which begins June 1.
Senate President Page Cortez and House Speaker Clay Schexnayder, both Republicans, supported Edward’s decision to call the special session.
Critics say the stimulus fund is not a long-term solution to the crisis. Royce Duplessis, the Democratic state senator for Louisiana Senate District 5, called the fund a “band-aid approach.”
“I have a strong belief that even if we move that money into this stimulus fund, it’s not going to be the panacea,” Duplessis said. “It’s not going to save us from this insurance crisis. It will just be a small stopgap to try and get companies on board.”
Duplessis added that the state doesn’t need “overnight companies” that don’t deliver when residents are in need.
Donelon told The Times-Picayune | New Orleans Advocate that seven insurance companies have already expressed an interest in the incentive fund. Five of these companies are already licensed to operate in the state.
Louisiana continues to be plagued by insurance woes as insurers exit or go out of business in the hurricane-hit state. After a series of damaging hurricanes in 2020 and 2021 — the Delta, Laura, Zeta and Ida — more than 610,000 home ownership claims were filed in Louisiana, according to the Louisiana Department of Insurance. As a result, property insurers have paid out $18.4 billion in claims as of June 30. About $11 billion of that total was paid to homeowners.
But as claims piled up, at least 11 insurance companies that issued homeowner policies in the state have defaulted. Five of the companies left about 26,000 claims for the federal bailout program to complete it. In addition, at least a dozen other companies have pulled out of the state, either by canceling existing policies or by announcing they will not renew them.
The situation has resulted in thousands of families paying higher premiums or moving on without coverage.
Although Louisiana was spared devastating storms last year, the state has seen an increasing number of hurricanes making landfall and leaving trails of destruction in their wake.
Additionally, although much of the damage occurred in Florida, Hurricane Ian is expected to impact insurance outside of the Sunshine State. Many of the companies writing insurance policies in Louisiana are based in Florida, which has been struggling to keep the insurance market healthy since 1992, when Hurricane Andrew flattened Homestead, wiping out some insurance carriers and leaving many remaining companies afraid to write policies or to renew.
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The Associated Press contributed to this report.