Insurance commissioner offers few answers at home insurance town hall

Louisiana’s insurance commissioner offered few answers to New Orleans residents concerned about the home insurance crisis. 

Over 100 New Orleanians packed a room at the University of New Orleans Wednesday to get answers from Commissioner of Insurance Jim Donelon about the state’s insurance crisis. Seven Louisiana insurance companies have gone belly-up, initially leaving 100,000 residents, primarily those in vulnerable coastal parishes, without homeowners coverage.

Some of those residents were able to secure new policies through the private market, while others were left to seek insurance from Louisiana Citizen’s Property Insurance, the state’s insurer of last resort, which charges higher premiums.. It is unclear how many residents are still without insurance at all. 

The primary question on everybody’s mind: What will it take to drive down the cost of home insurance in Louisiana? 

Donelon was unable to provide assurances of an immediate fix, telling town hall attendees that the state needed to build higher, out of the way of floods, and stronger, offering homes protection from strong winds.The commissioner, a Republican who is up for election in 2023, said that the state needed to attract more insurance companies by offering financial incentives and balancing consumer protections with business interests, as he believes more competition in the market will drive down costs. 

After Hurricane Katrina, the state offered subsidies to companies who would write policies in Louisiana. Donelon said the state spent about $29 million on the program before it was shut down in 2009. The legislature approved a similar program in the 2022 regular legislative session, but did not fund it. 

Donelon offered some relief to residents concerned about the premiums that they already paid to insolvent companies. Donelon said that in that circumstance, homeowners can be reimbursed. 

To other questions, Donelon had fewer answers. 

Residents who had to seek new policies after companies failed complained of their premiums going up by as much as 70%. Others said they were paying as much as $10,000. The median household income in New Orleans is about $43,000, according to the census bureau. 

“Why can’t they get a policy comparable to what they were already paying?” asked Rep. Jason Hughes, D-New Orleans, reading from a question card submitted by somebody in the crowd. 

“I don’t have an answer for that,” Donelon said, adding that legislators need to address that issue. 

When asked if the state will reach a point when catastrophic climate change drives all of the insurers out of the state, or companies will simply hike the costs to a point where homeowners can’t afford it, Donelon said “I hope not, because the state can’t afford it.”