Gov. Edwards says more must be done to make sure insurers can pay claims

Published: Jul. 27, 2022 at 7:06 PM CDT
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NEW ORLEANS (WVUE) - Governor John Bel wants the state to do a better job of making sure insurance companies are financially prepared to handle claims. This, as a bailout program for policyholders, is having to borrow millions to handle claims left behind by insolvent insurers.

FOX 8 asked Edwards about LIGA having to borrow millions of dollars to pay claims.

“Six hundred million is a lot of money. What I think we should do a better job of quite frankly is making sure that insurance companies who are in the market, in Louisiana who are issuing these policies have the proper capitalization and reinsurance in place that we know they’re going to be able to respond to their policyholders if these risks actually damage their properties,” said Edwards.

It is almost a year since Hurricane Ida struck southeast Louisiana and thousands of property owners are forced to rely on Louisiana’s safety net program to pay their insurance claims.

Dan Burghardt is a veteran insurance agent and owner of an insurance agency that bears his name.

“We all do, we all have clients that are trying to deal with this issue,” said Burghardt.

The Louisiana Insurance Guaranty Association also called LIGA recently received state approval to sell $600 million in bonds so it could continue to pay claims left behind by insolvent insurers. LIGA was created by the legislature in 1970.

Burghardt says LIGA has proved its worth.

“They’ve saved a lot of people from financial disaster, so they know at least they can recover and they can get a hold of somebody that can help them with their claim, pay it, adjust it,” said Burghardt.

Edwards wants changes given the spate of insurance company failures.

“So. I don’t think we’ve done a very good job on the front end, I’m hopeful that the commissioner of insurance and his folks there will do that,” said Edwards.

And then there are concerns that increasing flood insurance premiums will cause a lot of people to drop their coverage.

Sen. Bill Cassidy, a Republican representing Louisiana in the U.S. Senate has sounded off for months over FEMA’s new Risk Rating 2.0. pricing methodology for flood insurance premiums.

“It’s called actuarial suicide or death spiral where you raise premiums so much that people start to drop their policy which means more and more of the risk is on fewer and fewer people,” said Cassidy.

The Associated Press says a FEMA report it obtained shows the agency estimates 1 million fewer people will buy flood coverage by the end of the decade.

And on July 27, Cassidy and Sen. John Kennedy, also of Louisiana joined a group of other senators in writing a letter to FEMA asking that the agency explain the Risk Rating 2.0. pricing methodology.

Burghardt says property and flood insurance costs impact people’s everyday lives.

“This is a serious matter that could be an economic disaster to the state if we don’t get the insurance policies and rates in line so people can afford to survive here and be comfortable,” said Burghardt.

With increasing insurance costs, many Louisianans hope this hurricane season spares the state.

“Another storm this year would further exacerbate the problems that you’re talking about. Again, we don’t get a vote but we do get to prepare and do get to pray,” said Edwards.

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