NEW ORLEANS — Despite an uptick in insurance companies who will write policies in Louisiana, homeowners in Orleans, Jefferson, and St. Tammany Parish are still having difficulty finding coverage. This is because of a difference in how companies handle policies in densely populated areas versus rural ones.
Viewers have expressed frustration and worry over a second year in a row of sky-high homeowners insurance rates. For many people in Southern Louisiana, the cost of their coverage has multiplied since last year.
The problem began long ago when Hurricane Katrina drove insurance companies out of the state and caused rates to spike. In the years after, they began to slowly trickle back, and by 2019, rates had largely stabilized.
Then came the 2020 and 2021 hurricane seasons. Laura, Delta, Zeta, and Ida caused tens of billions of dollars in damage across the state. Once again, insurance companies packed up, leaving thousands of homeowners without coverage. 100,000 people now get their insurance from Citizens, the state’s insurer of last resort, which is legally required to charge 10% more than the most expensive private insurer in any given parish.
Since then, the state legislature has set aside $45 million dollars from the general fund to be granted to companies that write new homeowners insurance policies in Louisiana. It has successfully lured some companies to the state.
However, many living in our area’s largest parishes say they still struggle to find competitive rates. Stephen Lovecchio of Woodlands Financial Group says that is because insuring many homes in one small, dense area is a much bigger risk for companies than spreading out their policyholders over a larger area. “In the event of a hurricane or tornado,” he said, explaining the companies’ thinking, “I'm gonna get killed, because I have all my eggs in one basket. I need to spread them out.”
Therefore, the company will balance the number of policies it writes in larger parishes with those it writes in more rural areas. That makes them more selective when choosing which homes to insure in Orleans, Jefferson, and St. Tammany Parishes, and in turn, leaves homeowners with fewer options.
But there may be a small measure of relief coming for some. Lovecchio added that Citizens policyholders in Orleans Parish will see an 8% rate decrease starting January 1st. He is optimistic that it, combined with increased competition and favorable reinsurance rates for companies, will help stabilize the cost of homeowners insurance for Louisiana policyholders next year. “I think at some point, probably like June or July, we'll see the rates continually come down,” said Lovecchio.
In the meantime, there is no easy fix. For those who can afford to, building or retrofitting a roof to comply with the State Uniform Construction Code or the standards set forth by the Insurance Institute for Business and Home Safety forces the home’s insurer to offer a discount on its policy. The Louisiana Fortify Homes Program offers grants to eligible homeowners to upgrade their roofs, though this year’s application period closed November 27.
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