Higher prices for Louisiana policyholders, more insurer insolvencies and a property insurance industry with less capacity to serve homeowner needs may be the cascading impact of the damage caused by Hurricane Ian in Florida, industry observers say.
“All of the Atlantic-hurricane-exposed states are going to see a negative impact on insurance,” Jeff Albright, CEO of the Independent Insurance Agents & Brokers of Louisiana, told the Louisiana Record. He added that higher property insurance rates and more limitations on insurance or reinsurance options may be the end result.
More announcements from companies that intend to exit the Louisiana market could be on the way – after a recent string of insurer insolvencies, according to Albright.
“A number of the insolvencies were Florida-domiciled companies,” he said, “and with Ian hitting Florida pretty hard, there’s a possibility that you may see a couple more of these coastal-homeowners companies going insolvent as a result of Hurricane Ian.”
The size of Hurricane Ian is going to result in substantial losses, in the $20 billion to $40 billion range, according to Albright.
“There’s going to be lots of payouts,” he said, “including reinsurers who are going to pay out a lot of money. … This is three years in a row that we’ve had category-4 storms in the Gulf of Mexico, so I think reinsurers are going to re-evaluate the risk, and they know there are going to be more bigger storms, and they obviously have to price for that.”
Louisiana Insurance Commissioner Jim Donelon has said he expects that new laws the Legislature approved this year will help to strengthen the property insurance market and improve the claims process.
The reforms include increasing the minimum capital and surplus regulations governing property insurers in the state as well as a grant program to encourage homeowners to invest in fortifying and retrofitting their roofs to minimize damage during future storms. State lawmakers also created an incentive fund to encourage more insurers to enter the Louisiana market.
Gov. John Bel Edwards, meanwhile, has signaled he was prioritizing the health of the state’s property insurance industry. Last month, Edwards headed a delegation of state officials and business leaders that visited Lloyd’s of London, which has been a major player in the state’s insurance market. State officials sought to gain insights about how they might change laws or regulations to make Louisiana more attractive to insurers, according to a news release from the Governor’s Office.