As of Jan. 1, Louisianans could be dropped by their homeowners insurance companies without warning, as the state deregulated the market with a new law taking effect at the start of the year.
What's happening?
The new law ends what was known as Louisiana's "three-year rule" and threatens to worsen the Bayou State's "ongoing insurance crisis," New Orleans' Fox 8 reported. Insurers can now drop up to 5% of their three-year-old policies. Previously, those homeowners "could not be denied coverage, face larger deductibles, or be burdened with repeated rate increases," Inside Climate News reported in July 2024.
The state's Department of Insurance says this will increase competition, and veteran agent Dan Burghardt told the station that rates have stabilized. Any dropped policies have to be approved and are restricted by parish or ZIP code.
The state legislature also gave companies more time to pay claims, according to Fox 8. And there are lesser penalties for bad-faith actions by insurers.
The state has already been down this path with auto insurance policies, the cost of which rose after laws were altered in 2020. It has said it will reverse course if that happens again.
Why is this important?
The insurance crisis is partly the result of the changing climate. Louisiana is one of the most-affected states, with rising sea levels and increasingly intense hurricanes ravaging its Gulf Coast and beyond.
As a result, its low-lying marshlands are disappearing to the tune of tens of square miles every year. If even more insurers abscond from the market, the industry could collapse. The state-run insurer of last resort, Louisiana Citizens, is already overburdened, per ICN, and at least 12 companies have closed up shop since 2020.
"We didn't see anything in insurance reform that was really consumer-focused," Louisiana Progress executive director Peter Robins-Brown told Fox 8. "The insurance industry said that this package of reforms — highlighted by … ending the three-year rule — was going to drive prices down by creating more competition, and we haven't seen that yet.
"... My main concerns, especially around the three-year rule, are that they were all driven by the insurance industry,"
|
Do you think America is in a housing crisis? Click your choice to see results and speak your mind. |
Definitely 🙁 What's being done about the insurance crisis in Louisiana?
Fox 8 reported that Louisiana Commissioner of Insurance Tim Temple said there should be a special legislative session to further reform the industry.
It was also reported that Louisiana Citizens' rates will decrease by 5.5% for FAIR Plan holders and 4.4% for Coastal Plan holders. In May, home and auto insurers will have to disclose all available discounts that could result in lower premiums for policy owners.
"Our property insurance and auto insurance crises are really hurting people, maybe more than any other issue in this state," Robins-Brown told Fox 8.
Join our free newsletter for good news and useful tips, and don't miss this cool list of easy ways to help yourself while helping the planet.
Cool Picks
