The state of Louisiana is worried that the reinsurance market may begin to reject the risks of its assets, with the Insurance Commissioner saying that he fears “burning out” after consecutive years of hurricanes and other market problems.
As we recently reported, ALIRT Insurance Research analysts recently said they don’t see Louisiana’s property insurance market in the same trouble as its Gulf coast neighbor Florida.
However, after several years where hurricanes and storms have caused a lot of damage and shared many carriers with Florida, it is not surprising to hear that even the state Insurance Commissioner is a little worried about the future of the Louisiana property insurance market.
Earlier today we reported that property insurers operating in the state of Louisiana will continue to see claims from last year’s Hurricane Ida rise significantly, with total losses now reaching $13.1 billion.
But Ida was just part of the Louisiana picture and speaking to the Press Club of Baton Rouge yesterday, Insurance Commissioner Jim Donelon said that the industrial damage caused by hurricanes Laura, Zeta, Delta and Ida in the past year is half. reached $ 23.7 billion, the largest amount that fell in the reinsurance market and insurance providers (ILS).
Given the magnitude of the losses, it’s perhaps not surprising that lenders may be a little wary of the risks taking place in the government.
But Donelon pointed to the loss of property around the world, the increase in insurance rates seen everywhere, the rise in inflation and the cost of labor, including the situation where homeowners may become uninsured due to high repair costs, as all problems in the home insurance market. property of Louisiana. face this time.
So insurers and reinsurers are exhausted, while other carriers have failed, facing challenges in Florida that have stretched their financial capabilities and the result is that homeowners are becoming more expensive and often harder to find.
Which has been driving the expansion plans at Louisiana Citizens, the state’s last property insurance.
Which sounds a lot like Florida, doesn’t it?
Insurance Commissioner Donelon is calling on the state to help keep insurance affordable, asking lawmakers to approve a plan that would encourage insurers to write business in the state, and reviving the Insure Louisiana Incentive Program.
But, aside from the purchase and availability of primary insurance, there is another problem that keeps Insurance Commissioner Donelon awake at night right now and he is in the reinsurance arena.
Donelan is concerned about possible “remediation” by recyclers, who may refuse or limit their records in Louisiana.
He added that the reinsurance market has been filled with “chatter” about a company that failed but managed to refinance after a relatively minor storm.
“This company is trying to get a second income because of their shortfall,” Donelon told local media.
He said he was “deeply concerned” that such a situation would lead reinsurers to avoid risk in his state, or for other carriers in the same state.
However, the real problems that can reduce the interest in reinsurance are similar to those in Florida, the losses are high, the losses are slow and the primary insurances are often very cheap.
Louisiana doesn’t have the same lawsuits as Florida in its property insurance market, not to any significant degree, but there are many reasons to make reinsurance more expensive and for reinsurance capital to be more vigilant after a runaway. of losses and failures of transport in the state.
Also read: Louisiana insurance market not “Florida’s problem in the making” – ALIRT.