Insurance experts say Hurricane Idalia could impact rates in Louisiana

NEW ORLEANS (WVUE) - As Louisiana homeowners continue to deal with high insurance premium rates, all eyes are on Hurricane Idalia and the impact the storm could have even hundreds of miles away from where it makes landfall.

Hurricanes Ida, Delta and Zeta caused billions of dollars in damage in Southeast Louisiana in recent years, and insurance experts maintain those effects are still being felt as the Gulf Coast continues to get pounded by major storms.

“If you’re on a negative trajectory in Florida, it’s going to impact Louisiana,” said Jesse Keenan, a professor of sustainable real estate and urban planning at Tulane University. “Every time we get a big hurricane, whether it’s impactful or not, it’s going to let (companies) reset the pricing, both in the primary insurance market and the insurance the insurers buy, called reinsurance.”

Keenan said Florida, which is experiencing its own insurance crisis, is home to a number of companies also active in Louisiana.

“The geography it’s hitting in Florida is very similar to the geography in Louisiana,” he said, noting the Big Bend region of Florida does not have anywhere near the population of metropolitan areas like Tampa and Fort Myers. “(Companies) are again going to use the data points associated with how the storm surge impacts the bayous and this coastal geography.”

Meanwhile, reinsurance rates remain extremely high, leading to costs being passed on to consumers, said Brian Keefer, president of Allied Trust & Insurance.

“Just like the consumer buys an insurance policy from a carrier, carriers then buy insurance called reinsurance from reinsurers to protect them,” Keefer said.

Reinsurance rates, which Keefer said carriers like Allied have to pay, have skyrocketed in recent years due to the high number of natural disasters both in Louisiana and elsewhere.

“If you go back over the last 30 years, since Hurricane Andrew, more than 45 percent of the catastrophe losses over that 30-year period have happened in the last five to six years. And those reinsurers have not made money during that time,” Keefer said. “Because of all those losses we’ve had in the past few years, reinsurers have to set that capital aside to pay for those losses, so they can’t redeploy it back into the market.

“Losses elsewhere, outside of Louisiana, can impact the cost of reinsurance that we’re having to pay because it impacts that capacity and the rates (reinsurance companies) are willing to pay.”

Along with inflation driving up construction costs and the amount of money insurance companies have to pay out on claims, Keefer said it’s the perfect recipe for elevated premiums.

He said if the insurance marketplace in Louisiana is going to change, it has to begin with tort reform.

“Louisiana has replaced Florida as the new judicial hellhole,” Keefer said. “In 2020 through 2022, the Western and Eastern Districts were No. 1 and No. 2 in filed federal lawsuits in the nation. Florida and Texas have addressed the tort reform, leaving Louisiana as the lone target.”

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