Louisiana Insurance Commissioner holds town hall amid ongoing homeowners insurance crisis

Commissioner Jim Donelon talked to a packed room at the University of New Orleans on Wednesday evening, saying that another insurer has now pulled out of the state.
Published: Aug. 3, 2022 at 10:52 PM CDT
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NEW ORLEANS (WVUE) - A question and answer event at the University of New Orleans, focused on the state’s continuing homeowners’ insurance crisis, drew a large crowd as Louisiana Insurance Commissioner Jim Donelon fielded questions.

The event, which was organized by members of the Orleans Delegation to the state legislature, addressed the numerous insurance companies that have become insolvent, driving up the cost of homeowner’s insurance across the state.

Areas south of I-10 and I-12 have been hit especially hard.

According to Donelon, a seventh company has now gone belly-up in the Pelican State: Weston Insurance Agency.

“The failure of the seven companies that have gone down resulted in 144,000 policyholders being left without coverage by their insurer,” Donelon said.

Left without coverage, many have turned to Louisiana Citizens, the state’s insurer of last resort. Donelon assured the crowd that Citizens cannot become insolvent, but that the goal of the state is to get policyholders off Citizens’ books and onto the books of new companies.

Donelon suggested an incentive program to attract new insurance writers south of I-10 and I-12.

“Do things like the incentive program to get companies to come write in coastal areas and out of the Citizens’ book,” he said, adding that building codes should be upgraded.

He said 800,000 claims have been filed since 2020, due to Louisiana facing four major hurricanes: Laura, Zeta, Delta and Ida.

“Citizens today went through Laura, Delta, Zeta, Ida without reaching top of reinsurance bond,” Donelon said. “[Citizens] will not have to issue bonds for those losses.”

The sticker shock alone from the sky-high insurance premiums, and the difficulty in finding an insurer to write a policy south of I-10 and I-12, is causing people to flee the state, said State Representative Matthew Willard.

“When the person says there’s no way I can afford this, some of the agents have to say, ‘Well if you move to this part of Mississippi, you can get your policy down to lower than what it is right now,’” he said. “Nobody wants to have people leaving Louisiana. But what do you do when you’re required to have this coverage, and you just literally can’t afford it?”

A question many had centered on the situation in which a homeowner paid their premium check to an insurance company, which cashed it and later became insolvent.

Donelon said, in that circumstance, the homeowner can still be reimbursed. In the case of Southern Fidelity, which is headquartered in Florida, he said his office is still working on getting the data for premium refunds from the Florida Office of Insurance Regulation.

He said the data should arrive at the end of next week.

Donelon suggested reaching out to your mortgage company and have them reimburse you from your existing escrow, and paying them back when you receive your check, either from the reinsurance payout from the insolvent company or from your new insurer.

“We knew things were going to be changing, but not to this extent,” said Lavon Jackson, a New Orleans East resident who was dropped by State Farm after decades, and saw her new quote triple. “Why make us pay this type of money? We wasn’t hit that hard like that.”

If you want more information, you can go to the Louisiana Department of Insurance website. You can also call 800-259-5300.

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