Louisiana Insurance Commissioner Tim Temple (pictured) is speaking up as insurance companies take a “harder look” at where they operate amid the increased risk in doing business.
In a statement following a major State Farm announcement in California, Temple said: “As natural disasters become more frequent and more severe, the insurance industry is taking a harder look at each state to determine whether doing business there is worth the risk.
“Last week, State Farm General Insurance Company announced the non-renewal of thousands of insurance policies in California citing several factors including catastrophe exposure, inflation, reinsurance costs, and outdated regulation. This represents about 2% of State Farm General’s policies in California.
“California’s insurance department recently acknowledged that overregulation is driving insurers away, and the agency is making an effort to modernize oversight of its marketplace.”
When State Farm informed the market that it was discontinuing coverage for 72,000 houses and apartments in California, the insurer asserted that “it is necessary to take these actions now” in order to maintain adequate claims-paying capacity while complying with applicable financial solvency laws.
In Louisiana, Temple cited three key challenges being faced by the (re)insurance sector.
“Insurers and reinsurers have repeatedly told me they have three major concerns in Louisiana: catastrophe exposure, overregulation, and a poor legal environment,” the Insurance Commissioner noted. “I’m doing everything I can to address their first concern through my support for the Louisiana Fortify Homes Program and other resiliency efforts, and the industry is taking notice.
“But increasing resiliency is a long-term project that won’t attract companies to Louisiana on its own. We must also modernize our regulatory framework and fix our broken legal environment, and we must do both now. If we don’t enact bold change this session, I believe our ongoing insurance crisis will not just stay the same – it will get worse.
Temple added: “To the residents of our great state, I hope you will join me in asking the leaders at the State Capitol to pass the meaningful insurance reform they are considering this session. This is the only path to creating a competitive and stable insurance market that will help bring premium relief to Louisiana consumers.”
What do you think about this story? Share your thoughts in the comments below.
