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:
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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.
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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.
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Louisiana property owners pay $2.6 billion per year in premiums for all
property insurance purchased (commercial and residential).
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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.
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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.
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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
Insurance Journal
August 29, 2014