Louisiana regulators in late May approved property insurance rate hikes of 16 percent to 51 percent for three small companies, with larger increases for homeowners along the coast.
The Louisiana Insurance Rating Commission on May 24, 2007, approved a 16 percent increase in homeowners insurance rates charged by Lafayette Insurance Co., with 10,419 policyholders, a change worth $1.4 million to the company.
Actuaries indicated the company, which raised rates 38 percent rate last year, could have justified new increases averaging another 48 percent across the state, based mostly on its losses from 2005. But company representative Michael Sheeley assured commission members that Lafayette has adequate reserves.
“We’re in good shape with regard to being able to handle another storm,” he said.
Though Lafayette won a statewide increase of 16 percent, its policyholders in the New Orleans area will see increases of between 20 and 25 percent.
Two smaller players in the Louisiana insurance market, Fidelity and Deposit Co. of Maryland and Empire Fire and Marine Insurance Co., won approval, respectively, for rate increases of 51 percent and 49 percent, based on average charges across the state. Each company increased its rates by nearly 10 percent within the last year.
Policy changes ordered by the two companies, affecting deductibles for wind and hail damage and discounts for burglar and fire alarms, could increase costs in many instances. But the companies, both represented by Douglas Strommen at the Baton Rouge hearing, are prepared to write more policies in storm-damaged parishes. They now have just 558 policyholders combined in Louisiana.
Strommen said an agent for the companies would be tough to find because most of the firms’ Louisiana business is arranged through mortgage companies as they prepare home loans.
The commission approved rate increases for Louisiana Farm Bureau that will allow it to charge 48 percent more, on a statewide basis, for a “named peril” policy that is a more restrictive, and lower-cost, alternative to standard homeowner’s insurance, and 28 percent more for a homeowner’s policy for mobile homes.
But rate increases could range as high as 65 percent and 57 percent, respectively, for the two types of policies in the most vulnerable coastal areas, and new policies are not yet being written in the New Orleans area, company representative Brian VanDreumel said in an interview. The company is trying to mend from post-hurricane losses and the two programs haven’t had rate increases since the 2005 storms.
“Our company is slowly starting to get back on its feet” he said. “Right now it’s still fragile. We’re going to be conservative in writing new business.”
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