New La. commissioner is confident of success
By KEVIN CHIRI
Slidell news bureau
SLIDELL – There is no shortage of state or local issues that residents can disagree about, but one topic with near unanimous agreement is the need for insurance reform in Louisiana.
Homeowner insurance rates have skyrocketed in recent years, forcing some residents to abandon homes since they cannot afford the increased rates.
Slidell’s John Case, co-owner of Lowry-Dunham, Case & Vivien Insurance, is considered perhaps the foremost expert on insurance rates since he has been in the business for nearly 50 years.
And while he acknowledges the problem is terribly out of hand, there may be hope on the horizon with new Louisiana Insurance Commissioner Tim Temple taking over in the new year and determined to bring about major state reform.
Case has seen the rate increases first-hand and said he feels for residents who cannot afford to pay the incredible price hikes.
Case mentioned a few increases in Slidell that are, unfortunately, far from the only ones he could point to.
“Just to name a couple, there is a commercial building in Slidell that paid $12,000 a year for insurance three years ago, and now it is $88,000 a year. I have a policy for a condo that paid $90,000 a year three years ago, and now they are paying $300,000 a year for homeowner insurance,” he said. “The examples go on-and-on.”
The main reasons, he said, are fairly easy to understand, although not so easy to fix.
“Louisiana has had too many very expensive natural disasters so that meant companies had to raise their rates dramatically to cover their losses, and on top of that, the high risk to write policies in Louisiana has sent a lot of big-name companies away. They don’t want to write insurance here and there is nothing that can force them to,” he said.
Case said State Farm, Travelers and Allstate are three of the most well-known companies that have pulled out of the property insurance business here, but they are far from the only ones.
Temple will become the first new Louisiana Insurance Commissioner here in 17 years as Jim Donelon decided to not seek re-election. Temple, a former family insurance business owner, ran for the job unopposed and is anxious for an expected special session of the Louisiana Legislature immediately in January to address the problems.
Among Temple’s plans for change that he hopes will draw more companies back here are:
–Lean more on a “free market” approach with less regulations and rules. “Companies do not have to do business here, so we need them to choose to because it is good for them,” Temple said.
–Weaken a three-year rule that is unique to Louisiana and makes it difficult for companies to drop clients if they have had the policy for at least three years. “The rule makes it difficult for companies to manage their risk,” Temple said. A bill to weaken the rule, which was heard in the Legislature earlier this year, failed.
–Amend a law that makes it easy for property owners to sue the companies if they disagree with a claim settlement. However, the law change will allow policy holders to receive up to 50 percent more money in legal damages if they win the suit.
–Change the current state law that only allows insurance companies to have one rate increase a year. “That could actually lower rates since it allows companies to manage their risk better,” Temple said.
–Allow companies to pick where they want to write insurance, unlike the current situation that forces them to write in all parishes if they write in Louisiana.
Case is quick to agree that more companies writing insurance policies will lower rates for all. After Hurricane Ida hit Louisiana in 2021, there were nearly two dozen companies that left the state, or went broke by the end of 2022—all adding to the problems for homeowners seeking reasonable rates.
The Louisiana Legislature tried to entice companies back with financial incentives, but Case said that still hasn’t done a lot to fix the problem.
“After the state gave insurance companies money so they would write policies here, it still didn’t help a lot since some of them wouldn’t accept many policies. We had one of those companies that we wrote 50 policies on, and the company only accepted three policies,” he explained. “These days, no company wants to accept high risk policies.”
That leads to another problem that has grown over the years. Case said there used to be few homes on the water that were valued at over $500,000, but now there are so many that it creates a tremendous financial loss for insurance companies in the event of another bad storm.
Case said the increase in the high-priced homes on the water actually caught the insurance companies by surprise as they wrote policy after policy on them, only to see Louisiana hit with so many serious storms in recent years, which created millions of dollars in claims against the insurance companies.
“That definitely is another reason a lot of those companies pulled up and left since legally there was no reason they couldn’t,” he said.
Case added one other bit of information about the problem.
“There are bigger companies called re-insurance companies that provide insurance for the smaller insurance companies. In other words, if a company had tremendous claims to pay from a big storm, they had insurance to help them,” he noted. “But due to so many catastrophic storms, the re-insurance companies were hit very hard as well. Their rates increased and that forced small companies to leave the Gulf Coast to avoid the big risk of hurricanes and what it could cost them.”
Case said that for now there is little a homeowner can do, although he did make a few suggestions to lower a policy.
“Look at all the related coverages on your policy, like the contents, outside structures, living expenses in the event of a disaster and your deductibles. You can change many of those parts of the policy and it can reduce your premium,” he said.
Case said he is seeing more-and-more people drop insurance altogether, if they are in a position to do so.
“I always say you shouldn’t buy insurance on something you can afford to lose,” he remarked. “Of course, some can afford bigger losses than others, but if you can afford to go without insurance, it is something to consider.”
For now, residents are hoping Temple finds cooperation in the Legislature since the incoming commissioner is confident, he can fix the problem by bringing more companies back to Louisiana.
“The key is to create a competitive environment that brings more companies in. When more companies come here, then you have choices and you will see rates go down,” he said.