Louisiana’s property insurance market is vastly improved nine years after Hurricane Katrina devastated the state on Aug. 29, 2005, largely due to the implementation of statewide building codes and strategies that have helped create a more competitive marketplace, according to the state’s insurance commissioner.
“Following Hurricanes Katrina and Rita we developed a combination of strategies including the Louisiana Citizens Depopulation Program to improve Louisiana’s property insurance market,” said Commissioner Jim Donelon. “Our market is actually more competitive and more diverse than it was prior to 2005 and we now have 21 new insurance groups writing in Louisiana who were not here pre-Katrina. While larger companies have downsized their exposure along the coast, we’ve been successful in filling that vacuum with smaller, regional and financially stable companies that I believe represent the future of coastal property insurance markets.”
Commissioner Donelon says the state’s implementation of a statewide building code in response to Hurricanes Katrina and Rita has also been instrumental in improving the property insurance market in Louisiana.
During the 2005 First Extraordinary Legislative session, the Legislature enacted the first mandatory statewide building code, the Louisiana State Uniform Construction Code.
“Our statewide building code has been helpful on several fronts – enhancing the safety of Louisiana residents, improving the resiliency of Louisiana communities, and boosting confidence among insurers interested in offering coverage in Louisiana. We continue to push to raise awareness of the incentives to those who comply with the Louisiana State Uniform Construction Code including insurance premium discounts and tax deductions for retrofitting existing residential structures,” added Donelon.
Commissioner Donelon said the ninth anniversary of Hurricane Katrina is a good reminder to Louisiana residents to take precautionary measures before a hurricane threatens.
“Know your coverages and check with your agent to find out if there is a wind and hail, named storm or hurricane deductible written into your policy. Also be aware that companies stop writing property policies when storms approach the Gulf of Mexico,” he said.
Donelon also advised homeowners to purchase flood insurance.
The Louisiana Department of Insurance offered the following statistics on the Louisiana marketplace following Hurricanes Katrina and Rita:
- According to Property Claim Service estimates, Hurricane Katrina resulted in more than $25.4 billion in insured losses in Louisiana making it the largest insured loss event in the history of insurance anywhere in the world.
- Three weeks later Hurricane Rita caused $3.4 billion in additional insured losses in Louisiana. These estimates do not include insured flood losses which totaled $15 billion of payments from the National Flood Insurance Program for the two storms in the state.
- Louisiana property owners pay $2.6 billion per year in premiums for all property insurance purchased (commercial and residential).
- As the state’s insurer of last resort, Louisiana Citizens Property Insurance Corporation offers homeowners and commercial policies to those unable to secure coverage through private insurers. In 2008, Citizens’ market share spiked to 9.8 percent, making it the third largest insurer in the state. By 2013, its homeowners market share had dropped to 2.3 percent, making it the ninth largest insurer in Louisiana.
- Insurance premium discounts offered to those who comply with the Louisiana State Uniform Construction Code apply to new and retrofitted, one or two-family, owner-occupied and modular homes and are generally up to 20 percent.
- Louisiana tax deductions are provided to those who voluntarily retrofit an owner/occupied residential property to comply with the Louisiana State Uniform Construction Code. The construction code retrofitting tax deduction is 50 percent of the cost up to $5,000.
Source: Louisiana Department of Insurance
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