Louisiana insurance market not “Florida problem in the making” – ALIRT – Artemis.bm

Louisiana’s homeowner’s insurance market is not “another Florida problem in the making”, ALIRT Insurance Research experts say, highlighting the significant differences between the markets.

Due to the significant challenges facing the Florida homeowner’s insurance market, ALIRT said its clients have been asking if Louisiana is another market facing similar challenges.

Louisiana has also experienced insurance industry failures, with large insurance claims falling to insurance companies after several years of hurricane and storm damage.

Severe damage from hurricanes, tornadoes and other extreme weather events has taken a toll on some Louisiana homeowner carriers.

But it’s also true that many of them were offshoots of Florida players, so some of the challenges they felt from Florida made them strong players in the Louisiana market.

ALIRT CEO David Paul explains in a research note that, “In short, we do not believe that the housing market in Louisiana is another Florida problem in the making, although there is a clear connection between the two states.”

Adding, “That said, the Louisiana homeowner’s insurance market is facing challenges and we’re concluding by presenting a panel of 21 leading Louisiana homeowner’s insurance experts who are not part of the major insurance companies, with the goal of providing readers with an insight into the current financial crisis.” he can be in the middle of the group.”

Louisiana’s homeowner’s insurance market is smaller than Florida’s, with only $2.1 billion in written premiums in the state in 2021, compared to Florida’s $12.3 billion.

“In short, the Louisiana HO market is small and has a very low profile of the coast. This is understandable due to the difference in population, Florida has about 5 citizens,” said ALIRT.

The composition of the writers is also very different, with 61% of the wages in Louisiana written by the largest insurance groups of the country 8, where Florida sees the same groups of 8 writing less than 25% of its wages.

“This suggests that Florida relies heavily on small local or stand-alone insurers, with high-quality insurance groups far from them,” the researchers wrote.

As a result, ALIRT finds that Louisiana is less reliant on smaller, smaller insurers than Florida.

“ALIRT reports that of approximately 80 of the insurers established since the 1990s to serve the Florida HO market, approximately 25% have gone out of business. This number alone should be a warning to the continued instability of some of the existing carriers,” he said.

Additionally, Louisiana has not experienced “years of victimization by non-accident-related drivers,” unlike Florida.

Cooperation between the two countries comes from sharing the risk of Gulf Coast winds between them.

What Paul once wrote, “One thing that is notable – and perhaps unfortunate – is the growth over the years of the aforementioned small Florida homeowner’s insurance professionals in Louisiana in an attempt to diversify their properties. This strategy has been disrupted by the large losses associated with winds in Louisiana in 2020 and 2021. Although these insurers were moving far from home, it was clear that they were not distinguishing the risks of Gulf-related hurricanes.”

Adding, “The merger between the two markets has created a major crisis in Louisiana, as many Florida-based insurers are laying off jobs and exiting the latter state, further exacerbating an already troubled market.”

Louisiana’s problems occurred after the state’s worst hurricane damage, but even the shipping issues were not common, except among carriers that had already worked and been sued in Florida, it seems.

In addition, ALIRT feels that Louisiana has successfully addressed the challenges of the insurance market.

“Finally, even though the Louisiana homeowner’s market has been expensive since 2005, the state – to its credit – has not tried to create high prices through the use of premium rates and reinsurance, nor has it allowed its property insurance to compete with the private market, “This review is read.

The ALIRT paper points to “years of disruption” in the Florida market “which led to the exit of many international carriers and the rise of small, weak insurers that relied heavily on returns and a history of insolvencies.”

“ALIRT anticipates increased market volatility and financial failure in the Florida market based on the financial records of several of Florida’s smaller insurers. In fact, our April update on the Florida HO market found that approximately 70% of voluntary insurers This one in Florida had ALIRT Scores that fell into the “red zone” indicating potential need. The same is not the case in the Louisiana market, which traditionally has few dedicated insurers in Louisiana (indeed, several of these were filed for insolvency last year).

The analysis shows a brighter future for the Louisiana property insurance market, than the one Florida is facing without dealing with its problems.

“Even though the Louisiana market is facing some serious coastal disasters (such as hurricanes Katrina and Rita in 2005), the state has passed recent laws to help promote the market for healthy products. If the market can avoid hurricane damage in a few years coming (as well as lower insurance rates), we expect the public housing market to return with enough strength to handle the risks flowing to the Louisiana Citizens Property Insurance Corporation, “. analysis says.

Read all of our news and analysis of the Florida insurance and reinsurance market.