Louisiana residents are experiencing an insurance crisis that is impacting several policy types. Homeowners, flood, and auto insurance rates are skyrocketing, and in the case of homeowners are difficult to obtain.
With this in mind, GNO, Inc. has gathered background on each of these critical topics, outlined prospective solutions, and compiled current opportunities that can help citizens around the state navigate the complex issues, to best protect their assets and loved ones.
Homeowners Insurance
HOMEOWNERS
Current Problems: In 2020-21, insurers paid out more than $23 billion in insured losses from over 800,000 claims (approximately $4.62 paid for $1 collected); 12 insurer insolvencies and 12 voluntary withdrawals; reinsurance market has hardened internationally; Citizens premiums have increased by an average of 63%; availability, affordability, data collection, and legal abuse are persistent challenges
Prospective Solutions:
- Hurricane Mitigation Commission (SCR7) created to make recommendations to Insurance Committees
- LABI 2024 Legislative Working Group to consider unified reform priorities (ex: bad faith statute)
- HBA Insurance Task Force re-activated for additional reform (ex: re-roofing permit requirements)
Current Opportunities:
- Wind mitigation discounts, required since 2007, resulting in premium reduction of up to 46% with survey
- Insure Louisiana Incentive Program has attracted 8 new insurers and written 10,000 policies in GNO
- Louisiana Fortified Homes Program launching in October for grants of $10,000 per homeowners
- Fortified discounts now required for residential and commercial properties (Act 1)
- Assignment of benefits eliminated to reduce legal abuse (Act 364)
- Jefferson Parish and St. Charles Parishes now require residential re-roofing permits
- Uniform Construction Code and Amendments adopted, in effect as of July 2023 for stronger construction
- Individual income tax deduction of 50% for retrofit primary residence to meet building code
Flood Insurance
FLOOD
Current Problems: Risk Rating 2.0 causes premium increases of over 50% in 41 of 50 states; 134% premium increase in Louisiana; 168% increase in GNO; 545% increase in Plaquemines Parish; no peer-review of methodology; minimal discounts for mitigation limited information from FEMA; limited action from Congress
Prospective Solutions:
- NFIP-RE Act, which would create an affordability program, policyholders tools, and mitigation resources
- Ten-state lawsuit against FEMA; hearing date on motion for preliminary injunction pending
- CSFI Engagement Toolkit being developed to highlight Risk Rating 2.0’s impact by congressional district
- Government Accountability Office (GAO) report makes recommendations for FEMA’s transparency
Current Opportunities:
- Maintain NFIP coverage to benefit from 18% annual increase cap
- Engage colleagues (particularly out-of-state) to contact their congressional offices and join CSFI
Auto Insurance
AUTO
Current Problems: Least affordable state for auto insurance by percent of median income; second highest commercial auto premiums; while dollar loss per bodily injury claim is below the national average, Louisiana has 2.6 times more bodily injury claims per capita than the US and more than two times as many claims per capita as Alabama and Mississippi, which enjoy lower average insurance rates.
Prospective Solutions:
- Commercial Auto Insurance Task Force created (SCR19) to provide report; held first meeting
- LABI 2024 Legislative Working Group to consider unified reform priorities (ex: reducing jury threshold)
Current Opportunity:
- Bodily injury liability coverage cost down for some insurers following 2020 Session tort reform effort
