Fallout from Hurricane Ian is expected to worsen Louisiana’s insurance crisis
One insurance agent says what happens in Florida does not stay in Florida
NEW ORLEANS (WVUE) - The toll of mega storm Ian will go well beyond Florida. Damage caused by the hurricane in southwest Florida is expected to make the insurance crisis in Louisiana worse.
Stephen Lovecchio is a branch owner with TWFG Insurance.
“It is also going to hurt specifically a lot of the companies that operate in Louisiana because they also operate in Florida, So they’re going to get hurt in Florida, and it’s going to hurt us in Louisiana as well,” Lovecchio said.
Dan Burghardt owns an insurance agency bearing his name.
“What happens in Florida doesn’t stay in Florida,” said Burghardt. “These companies that are in Florida are also doing business in Louisiana, several of them, and they will be affected.”
He thinks the catastrophic damage in Florida will impact insurance rates.
“Increase in premiums will be the major first impact, rate increases and their commitment to remaining as an insurer is up to them,” said Burghardt.
Lovecchio thinks some insurers may leave the industry.
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“Possibly one or two more carriers going out of business just from not having enough reinsurance coverage from damages that they may have gotten in the last day or so in Florida, might be too much for them,” he said.
Reinsurance is coverage insurance companies buy.
“It will definitely affect us from the reinsurance standpoint of making it harder to get reinsurance and more costly for all the carriers that operate not just here in Louisiana but along the gulf coast for hurricanes, for hurricane coverage,” said Lovecchio.
Sen. Kirk Talbot, R-River Ridge, chairs the Senate Insurance Committee.
“Ian will obviously stress than reinsurance market further, which means we will just have to be vigilant and be aggressive in trying to attract companies to come here and try to do everything we can to lower rates, and that’s what we’re doing,” said Talbot.
He said Florida’s insurance market was having serious problems before Ian hit.
“The insurance market and the insurance environment in Florida Hurricane Ian was really, really a disaster. They were having big problems there, a lot of companies failing,” said Talbot. “So, things that are happening outside of Louisiana are having an adverse effect on us here.”
Talbot is working on an incentive package to help attract more insurers to Louisiana.
“The incentive program that was done right after Katrina before I was in legislature, but right after Katrina was very successful, so we have a template on what has worked, the difference between that one and this one is they still have to write policies below Interstate 10, but with this incentive program, if they use the incentive money, they got to pull policies out of Citizens,” he said.
Louisiana Citizens is the state’s insurer of last resort. Revenues for the incentives must still be recognized by the state Revenue Estimating Committee.
Agents say insurers will wait until this hurricane season is over to begin writing storm coverage. Lovecchio thinks the incentive package needs to take into account companies already doing business in the state.
“It needs to be a little bit bigger. What that would do is allow the companies that are still operating in Louisiana to start writing more business, because the importance of them writing more business is that we don’t think we’re going to get a lot of new carriers coming into Louisiana,” Lovecchio stated. “So, if we can help the companies that are currently writing by incentivizing them to take on more business because they will need the money to take on more business, that’s probably going to be our best option in the short term to head off 2023, which could be worse than 2022.”
Louisiana Governor John Bel Edwards is in London and on Thursday, Sept. 29, he and some business leaders met with executives of Lloyd’s of London’s insurance marketplace on the insurance crisis.
“They’ve been a major insurer of U.S. businesses and personal property markets and commercial property. I would say 40% of the United States premiums go to Lloyds,” Burghardt said.
Edwards’ office said discussions focused on Louisiana’s relationship with the insurance industry and how the state can retain major insurers.
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