Jerome “Z” Zeringue was lucky his family in Houma survived Hurricane Ida with $7,000 in damage.
“It could have been worse,” said “Z”, a Republican congressman who saw many of his friends and Louisianans in the Bayou Country lose everything.
But it got worse, not just for Zeringue but for almost everyone living along the Louisiana coast.
Many of those who were able to rebuild are unable to stay because of the high cost of homeowner’s insurance in the private market and through Louisiana’s Citizens Insurance Company.
“It could change the look of the lower parts of LaFourche and Terrebonne parishes because people can’t afford to live there,” “Z” said. “Many people are already choosing to move. They can’t afford to live here.”
Although Zeringue did not pay interest on his insurance — he had $8,000 in cash — his private company dropped him after Hurricane Ida.
Zeringue’s insurance agent told her that Citizens was her only option, which would raise her annual homeowner’s premium from $2,300 to $9,000.
“I told him I had to take the risk; I’m not going to pay $9,000,” said “Z”, who was able to take the risk because his house is mortgage-free. “Finally we found a plan in the private market, but it increased our price to $4,500, and this is very low and low security.”
Since then, the Citizens’ board has voted to increase rates by another 63% starting January 1, 2023 when Louisiana Insurance Commissioner Jim Donelon signed off on the rate hike.
Many homeowners are forced to become citizens after seven insurance companies failed to follow Hurricanes Ida and Laura and other companies stopped writing new business under Interstate 10 after 800,000 claims totaling $22 billion.
“After the hurricane Laura and Ida’s companies pulled the plug,” Donelon told USA Today last week.
Higher property insurance premiums combined with new increases in flood insurance could create a financial storm that threatens homeowners in south Louisiana just as hurricanes Ida and Laura have in the past two years.
“Of course, as you know, it’s a problem out there,” Donelon, a Republican, told members of the Louisiana Legislative Joint Budget Committee last week.
Citizens is considered Louisiana’s insurer of last resort, a state-owned company created by the state to pay property premiums for those who cannot insure them in the general market. By law, resident rates must be 10% higher than the highest market value in each parish or the actuarial rate, whichever is higher.
Citizen customers have tripled to around 106,000 over the past two years with around 500 more being added every day.
“In my 44 years in the insurance business, I have never seen a home insurance crisis like this,” said Eugene Montgomery, a Citizens board member who is also president of the Private Community Financial Insurance Center, which has offices in Baton Rouge. and Monroe.
“Some people’s insurance premiums are going to be higher than the claims,” Montgomery told USA Today this week.
Donelon presented a plan to the Joint Budget Committee last week that he believes could entice private insurers back into the market, which would lower rates and help reduce the burden on citizens.
He wants lawmakers to approve a $20 million incentive program that he hopes will attract private insurers to the market or encourage existing ones to suspend new policies.
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Donelon’s plan will create a fund from money that has already been collected by his department but is currently kept in the state fund.
It is unclear whether his plan will be approved by Democratic Gov. John Bel Edwards and the Budget Coordination Committee or whether it should be presented to the full Legislature, which does not return to session until late spring.
“If it’s possible, that’s what we have to think about,” said “Z”, who is the chairman of the Budget Coordination Committee and the House Committee. “It’s confusing.”
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“Z” said he was expecting an answer to this question in a few weeks.
In the meantime, he said, “we have to pray that we don’t have another storm.”
“God help us when we find another big event,” he said. “It would be a total waste.”
Greg Hilburn reports on state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1