The Louisiana Department of Insurance hosted a “State of Insurance” summit yesterday at the University of New Orleans to mark a decade since Hurricanes Katrina and Rita wreaked havoc across much of the state in 2005. The event focused mainly on the property and flood insurance markets since the storm, as well as the reduction in Louisiana Citizens Property Insurance Corporation’s market share.
During a panel on the recovery of the property insurance market, moderated by Commissioner Jim Donelon and including Jeff Albright of IIABL, Richard Clements of PIA, Blythe Lamonica of the Coalition to Insure Louisiana and Vijay Ramachandran of Louisiana Citizens, attendees had a chance to reflect.
“What we did right [immediately after the storm] was that we worked together,” Blythe Lamonica explained. “In 2005, after both Katrina and Rita, the federal government basically said, ‘you need to learn from this, we’re not going to give you any money until you all start working together’ – and that’s exactly what we did. Not just from the business community, but also from the government and the regulatory bodies…That’s what makes Louisiana special – we learned.”
The panelists also spoke of the marked improvement in consumer insurance literacy since the Katrina experience. Addressing Donelon’s query about the knowledge base of consumers in the last decade, Richard Clements said, “I think our consumers have really become claim veterans now,” Clements said. “They also know to read their policies now. We can’t say that everybody does, but people are much more familiar with provisions and things like replacement cost and how long it takes to get that back.”
However, Clements and the other panelists warned against becoming complacent. “Yes, I think people did get some amnesia since it was so long ago, but we have a much better consumer today than we did [in 2005] and people know they can shop around with the new carriers coming in,” he said.
In a special report associated with the Summit, also issued yesterday, LDI notes several facts about the recovery and growth of Louisiana insurance markets since Hurricanes Katrina and Rita, including:
- Louisiana now has 22 new insurers operating that were not here in 2005, an outcome attributable in part to strategies including legislative reforms, active recruitment of companies and the Citizens Property Insurance Depopulation program.
- In 2014 Louisiana homeowners’ rates rose 2.8 percent on average which is the lowest statewide average rate increase since 2005.
- To date, zero companies in Louisiana became insolvent as a result of Katrina/Rita losses.
The report also cites a noticeable increase in general competition in the property and casualty sector over last year, with overall rate increases at 1.9 percent for all lines of business (including workers’ comp). That’s compared with a 3.3. percent rate increase in 2013.
As the largest insured disaster in U.S. history by far, Hurricane Katrina changed and challenged the insurance landscape in Louisiana on a permanent basis. “There’s no silver bullet,” Commissioner Donelon said. “It’s going to take a thousand Band-Aids to recover this market – we’re at about 300 of them right now.”