By Scot Kersgaard
By the time Hurricane Katrina had come and gone and skies again were sunny and breezes calm, insurers in Louisiana were left with more than $25 billion in insured losses from more than 725,000 claims. What would happen next was anybody’s guess but the smart money was on insurance companies packing up and taking their money someplace with less risk.
According to a State of the Market Report issued by the Louisiana Department of Insurance, it hasn’t happened. Commissioner James Donelon says the insurance market in his state is stronger today than it was the day before Katrina hit.
“It’s hard to imagine and it’s not something we thought possible back then, but our property insurance market is more competitive and more viable than it was the day before Hurricane Katrina. To understand how far we’ve come, we must take a look at where we were just ten years ago,” he wrote in the introduction to the report.
“These are staggering payouts that would scare off insurers with even the deepest pockets,” he wrote about the costs associated with Katrina.
Donelon noted that some big companies did leave the state, but says they were replaced by new, smaller, regional companies that are financially sound and backed by the international reinsurance market. He says Louisiana is now a national model for how to recover from an insurance disaster.
The report says 22 insurers that have entered Louisiana since Katrina. Moreover, the nonprofit Louisiana Citizens Property Insurance Corporation has seen its market share drop from 9.8% shortly after Katrina to just 1.8% today as more people have been able to secure lower-cost policies through the private market.
