In the midst of the insurance crisis, the crowd holds a meeting in New Orleans to enjoy the premiums

About 100 people packed a public meeting in New Orleans Wednesday night to voice their frustrations over rising home insurance rates and to question the Louisiana governor charged with managing a claims-laden industry two years after the hurricane.

Insurance Commissioner Jim Donelon and members of the New Orleans delegation to the Legislature tried to convince the public that the recent legislation will help stabilize the emerging industry. This includes new requirements for companies to have more cash to cover more in the event of major disasters.

But the changes don’t go into effect until 2026. And they don’t offer relief to the thousands of people who have high interest rates after seven insurance companies went bankrupt last year.

The crowd, in the football stadium at the University of New Orleans, erupted into applause as the lawmaker asked Donelon the question that seemed to be on everyone’s mind: What would it take to lower the cost of homeowners insurance in Louisiana?

Louisiana Insurance Commissioner Jim Donelon will host a public hearing on the state’s insurance crisis at the University of New Orleans on Wednesday, Aug. 3, 2022.

Donelon did not provide an update. He said it is important for the government to strengthen its construction laws providing financial incentives for insurance companies to write policies in high risk areas.

The insurance executive joined them in a question-and-answer session with insurance department officials and the Louisiana Insurance Guaranty Association, a state-affiliated organization responsible for defaulting insurance companies.

The agency’s John Wells said this week the agency has paid nearly $10 million to Lighthouse Insurance Corp. customers. and its subsidiary, Lighthouse Excalibur Insurance Co. The company had more than 30,000 policies.

To help offset some of the losses and restore the savings, the agency hopes to borrow $600 million through a bond issue. This will be the first time in three decades that the organizations have done so.

Louisiana insurance

People listen to Louisiana Insurance Commissioner Jim Donelon speak about the state’s insurance crisis during a public hearing at the University of New Orleans on Wednesday, Aug. 3, 2022.

Meanwhile, some of the company’s customers who have failed to seek new insurance, are facing double or triple the premiums they had under their old policy.

“Why can’t they get the same policy as they were paying before?” said Rep. Jason Hughes, D-New Orleans, reads a question submitted by a resident.

“I don’t have an answer for that,” Donelon said. He said MPs should step in and provide emergency funds to help close the gaps.

Donelon offered some suggestions:

  • Ask your mortgage broker to help you find or change your policies.
  • When home renovations cost more than the remodelers expected, file tracking can prove the difference.
  • If a company cancels a policy you have had for at least three years, file a complaint with the Department of Insurance.

In opening statements, Donelon and lawmakers explained why Louisiana’s insurance industry has reached its peak.

“Many of our citizens are facing hardships, which we understand you have not created,” Hughes said.

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Lots of savings

MPs pointed to a number of proposals aimed at tackling the problem. These include new rules to raise the amount of premium insurance that must be carried – the first line of defense against paying out claims in the event of an accident.

The minimum will increase from $3 million to $5 million by 2026, and $10 million by 2031. Donelon said lawmakers copied legislation from Florida, which in previous years increased its minimum income to $10 million.

The four hurricanes that have hit Louisiana since late 2020 have put the homeowner’s insurance market in a very volatile state. Property insurers paid $18.4 billion in claims starting June 30, according to data from the Department of Insurance. About $ 11 billion was given to homeowners, the show shows.

Seven failed companies

Donelon described the situation as “a problem,” and called a meeting Wednesday evening to answer questions and make recommendations.

Among the number of claims, seven insurance companies failed last year. Five of the companies left 26,000 requests for the state program to close, pushing it to the Louisiana Insurance Guaranty Association.

The contract is funded by fees assessed to other insurers that do business in the state. Its current plan to borrow money to pay claims is the first time in three decades that it has been in place.

Another 12 are leaving Louisiana

Meanwhile, at least 12 companies have filed withdrawal notices with the insurance department in the past two years, meaning they are leaving Louisiana. Some have cited the recent hurricane as the reason. Companies that have chosen to reduce or stop writing new policies.

The combined effects of the market shakeup are moving many people to the state’s last insurer, Louisiana Citizens Property Insurance Corp. Since March, 13,000 more policyholders have been added to public health insurance – a 37% increase since Hurricane Laura hit. 2020.

The Department of Insurance found companies to take policies from the first four companies that failed, finding policy holders without much disruption. But 64,000 customers who relied on three other companies that failed — Lighthouse Property Insurance Corp., Lighthouse Excalibur Insurance Co. and Southern Fidelity Insurance Co. – were thrown into the open market for their answers.

Support for new insurers

Homeowners say they are finding fewer options and higher prices as they search for new options.

Donelon has said he wants to re-start a program Louisiana created after Hurricane Katrina in 2005: Grant money to insurers who were willing to start writing policies in Louisiana.

In total, the state spent $29 million on the Insure Louisiana Incentive Program. This incentive ended in 2009, when auditors complained that the money was paid before we signed the financing agreement.

The Legislature also approved the program this year but did not fund it.