Insurance Commissioner Jim Donelon has approved a request from Louisiana’s insurer of last resort for a 63% increase in residential property insurance policies.
The rate increase for citizens begins in January. It won’t affect current policyholders until they renew their policies, a Louisiana Department of Insurance press release said. For example, if a homeowner obtains a policy in November this year, the premium would not be affected by the rate increase until October 31, 2023, according to LDI.
The rate increase is “almost entirely the result of the increased cost of reinsurance for Citizens’ increased policy count this hurricane season,” the statement said. Several private insurance companies have gone bankrupt or left the state in recent years, sending tens of thousands of homeowners to citizens.
In addition, Louisiana law requires that the citizen rate for each of its policy types in each parish be at least 10% above the highest allowable market rate or 10% above the actuarial rate, whichever is greater. .
“There are no candies – this increase is extremely painful but required by law to ensure citizens can manage potential future catastrophe for its many policyholders,” Donelon said in a statement.
He said he was working with lawmakers to attract more insurers to the state through a “very successful” program after Hurricanes Katrina and Rita in 2005.
LDI expects the number of insurers writing policies to increase in the coming months, according to the release. Citizens will refund an insured’s unearned premium if they find a policy with another insurer before the end of their policy term, he said.