Out-of-state plaintiffs’ attorneys and insurance claims investigators are descending on Louisiana in hopes of reaping financial rewards from residential damage resulting from four storms that slammed the state during the last two hurricane seasons.
Insurance industry observers see the property insurance market in the state as increasingly problematic in the wake of six property and casualty home insurers being declared insolvent since August 2021. In turn, many aggressive players promising quick claims settlements have become active in Louisiana.
“Following the four hurricanes in 2020-2021, out-of-state plaintiff attorneys and public adjusters have descended on Louisiana promising big settlements for policyholders,” Jeff Albright, CEO of the Independent Insurance Agents & Brokers of Louisiana, told the Louisiana Record in an email. “This has led to an increase in frivolous lawsuits and inflated claims. The increased legal expenses and claim costs will inevitably increase future premiums for Louisiana policyholders.”
Louisiana homeowners currently pay some of the highest property insurance premiums in the nation. The average annual premium is now $2,009 for $250,000 in coverage, requiring Louisiana residents to spend 2.92% of their median household incomes on property insurance, according to Bankrate.com.
On average, Louisiana homeowner premiums are 45% above the national average of $1,383 per year, according to Bankrate. The high rates are generally attributed to the number of hurricanes and other storms that hit the Gulf Coast, including hurricanes Laura, Delta, Zeta and Ida, which caused more than $76 billion in damage during the 2020 and 2021 hurricane seasons.
Most recently, the fallout from the intense storms has led to the insolvency of Weston Property & Casualty Insurance Co., which had about 10,300 Louisiana policies, according to the Louisiana Department of Insurance. In addition, United Property & Casualty Insurance Co. (UPC) had its financial stability rating downgraded recently, meaning that some UPC policyholders will be forced to find new insurers, the department reported.
Both companies’ policyholders will have 60 additional days to place policies with Louisiana Citizens, the insurer of last resort in the state, in the event they cannot find another insurer in the private market, according to Louisiana Insurance Commissioner Jim Donelon.
The state’s property insurance market is expected to face continuing stress in the months ahead as the National Oceanic and Atmospheric Administration forecasts an above-average-strength hurricane season this year.