Despite the devastation from Hurricane Katrina in 2005, Louisiana Insurance Commissioner Jim Donelon says the state’s insurance market is stronger now and that the “outlook for continued market recovery is positive.”
Donelon credited several key factors for the market’s recovery, beginning with the efforts of the Coalition to Insure Louisiana (CIL), a broad-based group of 40 professional and business organizations dedicated to maintaining the availability and affordability of private insurance markets that serve the needs of Louisiana citizens and businesses.
The state legislature’s adoption of the first-ever statewide building code during a special session held two months after the storms has been a success, Donelon says. Houses being built and/or repaired following Katrina and Rita must meet strict building code standards that help properties withstand hurricane force winds. Buildings that meet code specifications are not only more attractive to carriers, they are also eligible for tax credits and insurance premium discounts.
Under the Insure Louisiana Incentive Program, adopted by the legislature and then-governor Blanco, new or existing private insurance companies were encouraged to assume policies currently covered by Louisiana Citizens Property Insurance Corp. (Citizens). Up to $100 million in incentive money was made available to companies who met certain writing requirements and enhanced solvency standards if they agreed to take a portion of the book of business out of Citizens. Through this program, $29 million was accessed by five new-to-the-state companies.
In all, through a private sector led effort and with the help of new legislation in place, 12 new-to-the-market companies are now writing property insurance in south Louisiana.
Citizens saw its policy numbers spike from 110,000 prior to Hurricane Katrina, to a little more than 170,000 following the storms. In 2009, the market share of Citizens fell to 129,000 policies and 6.4 percent of the total Louisiana homeowners market, an amount lower than the Citizens market share on the day prior to Hurricane Katrina. Citizens is now third in terms of its share of the property market in the state.