Donelon makes a pitch to international reinsurance industry leaders amid the insurance crisis
NEW ORLEANS (WVUE) - Hurricane Nicole hit Florida’s east coast with powerful winds on Thursday before moving on. It was a roaring reminder that the 2022 Atlantic Hurricane Season is not over.
And more than a year after Hurricane Ida devastated parts of southeast Louisiana, the state’s insurance market is still trying to recover from some insurers leaving the state and some others failing financially.
In light of that, Louisiana Insurance Commissioner Jim Donelon recently traveled to London where he held talks with major insurance industry players.
“I really, really think it was very beneficial,” Donelon told FOX 8.
Insurance companies buy insurance coverage and the reinsurance market is feeling the impact of mounting natural disasters and other events that result in insurance claims.
“There’s less appetite for reinsurance this year, anticipated this year than has been in recent years, so we were playing defense,” said Donelon.
He met with executives of Lloyd’s of London.
“Thirty-seven percent of their global premium volume is reinsurance, globally,” said Donelon.
And Donelon also had face-to-face talks with higher-ups with the International Underwriting Association of London and Aon, said to be one of the largest international brokerage houses while abroad.
His message: Louisiana is still a good place to do insurance business.
Donelon said he pointed out that many homeowners have new roofs due to Hurricanes Laura and Ida.
“With that improvement in our market, it should make for a more attractive place for them to do business than it was before those improvements were made to our residential book of business,” said Donelon. “New roofs over and over again fare much better.”
And he shared with the insurance industry heavyweights information about Louisiana’s new incentive program for insurers. Currently, because of insurance company departures Louisiana’s insurer of last resort s overloaded with policies.
“As we did after Katrina and Rita very successfully to depopulate what is now 120,000 policies in our market of last resort priced above the private sector with a recent big rate increase--to help those folks get out of Citizens and not bear the brunt of those rate increases,” said Donelon.
He believes efforts focused on getting hardier roofs installed going forward will be a big help, in terms of, improving Louisiana’s insurance Market.
“The program called Fortify Homes which allows for stronger roof construction that will bring with it a discount in insurance premiums resulting as Alabama has experienced in a much-improved market or book of business for companies to come insure because of the resilience of those fortified homes with better roof covering on their building,” said Donelon.
In late September, Governor John Bel Edwards also flew to London where he met with top people with Lloyd’s of London’s insurance marketplace. He spoke to FOX 8 about the discussions while in the U.K.
“Lloyd’s told us that in the United States, Louisiana has the sixth most insurance from Lloyd’s which is kind of surprising to me, most of that is commercial within the industry,” said Edwards.
He said they also discussed what Louisiana might be able to do to improve the attractiveness of its insurance landscape.
“Lloyd’s indicated to us that Louisiana is a place that certainly they want to be but there are things that we can do to make it more attractive and more stable, more predictable for insurance companies and we’re going to be working to see whether we can get some legislation passed if that’s what it takes,” said Edwards.
Donelon liked the responses he received while in London.
“What we were told is, we know Louisiana, we like Louisiana, we’ve been doing business there, big business there, comparable to the business they do believe it or not in France and Germany and we’re very comfortable with what we are hearing from you and what we know from our experience is the case in Louisiana, our challenge is the global capacity available to reinsurers to take on risk all around the globe,” he said.
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