Louisiana’s newly appointed insurance commissioner has voiced serious concern over the state’s persistent challenge in offering affordable insurance coverage, highlighting the need for legislative measures to attract more insurance providers to the region.
Appointed earlier this year, ex-insurance executive Tim Temple shared his insights with a state legislative committee on Tuesday, emphasizing the gravity of the insurance predicament facing Louisiana.
“Louisiana is experiencing the worst insurance crisis in its history,” Temple remarked. He further elaborated on the financial strain it places on residents, noting, “The average citizen in Louisiana spends more of their paycheck buying insurance than other states, so that’s the crisis that we’re facing.”
The situation worsened following the hurricanes of 2020 and 2021, leading to the financial collapse of several insurers and the exit of others from the state’s market. Access Home Insurance, Americas Insurance, FedNat Insurance, Gulfstream Property and Casualty, Lighthouse Excalibur, Southern Fidelity, State National Fire Insurance and Weston Property & Casualty and many others have recently closed their doors in Louisiana. The state has been desperately trying to find private insurers to take risk away from its insurer of last resort, Citizens.
Temple detailed the impact of these natural disasters, stating, “We’ve had four hurricanes in a 12-month period, 800,000 property claims, again it was unprecedented. And as a result of that, we’ve had 12 markets that went insolvent. Those are 12 markets that took consumers’ premium dollars with a business plan that was supposed to pay claims and they didn’t. They went insolvent.”
He also bemoaned the reluctance of reinsurance companies to operate in Louisiana, highlighting their disinterest in covering risks within the state.
During the same legislative session, insurance industry representatives shared their perspectives. Noel Bunol, of Gulf States Insurance, and Eric Berger, of Gray Insurance Company, blamed excessive litigation and regulation as major deterrents for insurers considering entering the Louisiana market.
Attorney Rep. Edmond Jordan (D-Baton Rouge), who co-owns Cypress Insurance Agency in Baton Rouge, questioned the focus on litigation as a primary issue driving up insurance premiums, while Ben Riggs, from Louisiana Progress, argued against blaming property owners for seeking legal recourse when insurance companies fail to provide fair treatment.
Temple proposed several insurance reforms, including modifying the rule that protects customers from being dropped by carriers after three years, aiming to allow companies more flexibility in managing risk. He also suggested a shift from the prior approval system for rate changes to a file-and-use system, which would enable insurers to implement rate changes more swiftly.
“Louisiana has a very heavy-handed regulatory reputation,” said Temple. “We’re changing that.”
Last year, the previous insurance commissioner, Jim Donelon, had pinned his hopes on an incentive plan for insurers worth $45 million. That attempt, however, hasn’t been enough so far, given the state’s high risk of weather damage. According to the National Oceanographic and Atmospheric Association (NOAA), 63 hurricanes have struck Louisiana since 1822, second in number only to Florida and Texas. In any given year, the city of New Orleans has about a 40% chance of being struck by a tropical storm.
