At Least Seven Property Insurance Companies In Louisiana Have Failed Since Hurricane Ida In 2021
Last week, Louisiana insurance commissioner Jim Donelon held a press conference to announce some very bad news. A few months earlier, a major insurance company called Lighthouse had gone bankrupt, leaving almost 30,000 homeowners in the state without storm coverage. The company went under thanks to last year’s Hurricane Ida, which led to $400 million in damage claims, far more money than the company had on hand. It had been up to Donelon to find a new company to take over these abandoned policies, but no other company wanted them. In fact, other companies were fleeing the state en masse. “Unfortunately, the unprecedented level of damage from Hurricane Ida broke the backs of [these] companies,” Donelon said at the press conference. “Right now, we are trying to stop the flow of companies exiting our state.”
As another hurricane season promises to bring extra-strong storms driven by high ocean temperatures, Louisiana’s insurance market is headed for a tailspin. The damage from Hurricane Ida caused at least seven private insurance companies to collapse or cancel their policies, and several more could be on their way out, with dire implications for the state’s housing market. The market collapse threatens to leave tens of thousands of homeowners uninsured during the most dangerous time of year. Following on the heels of upheaval in the fire and flood insurance markets, the turmoil in Louisiana is yet another glaring signal that property and insurance markets aren’t prepared to deal with the financial fallout of climate-driven disasters.
EDIT
In the early twentieth century, private insurance companies stopped covering flood damage, in large part because they couldn’t turn a profit — the same homes were flooding over and over again, leading to huge claim payouts every time. In the late 1960s, Congress stepped in to create NFIP, a public insurance program that would offer universal flood coverage. Private insurance companies still cover other kinds of hurricane damage, though, because those risks are lower: Floods happen over and over again in communities near the water, but an individual homeowner’s chances of getting hit by a whopper tropical storm are always going to be pretty low.
EDIT
As storm victims filed damage claims after the storm, the dominoes started to fall. Two insurance companies that covered around 30,000 customers in the state announced in early December of last year that they were unable to pay out all their claims from Ida. One of them, Access Home Insurance, had received more than $180 million in claims but only had $115 million in cash and assets available. A third insurer failed just days later, and another one collapsed a few months after that. Another folded earlier this month. Even insurers that didn’t face financial ruin have moved to exit the state market, canceling all their policies rather than risk having to make an enormous payout this hurricane season. A dozen insurance companies in total have either failed or left the state over the past two years, according to the New Orleans Times-Picayune, disrupting coverage for at least 100,000 customers. At least two state lawmakers have lost their coverage, including one member of the state’s House Committee on Insurance.
EDIT
https://grist.org/housing/louisiana-homeowner-insurance-hurricane-season/
= new reply since forum marked as read
