Louisiana’s new insurance commissioner, Tim Temple, is stepping up efforts to attract more home insurers to the state amid a deepening insurance crisis, marked by skyrocketing premiums and companies exiting the hurricane-prone market.
With homeowners facing high insurance costs and a dwindling pool of insurers since hurricanes Laura and Ida, Temple’s regulatory reforms aim to stabilize Louisiana’s volatile market.
He aims to strike a balance between protecting homeowners and providing insurers with the flexibility needed to manage risks effectively.
“We want Louisiana to be stable and predictable,” Temple said. “It will be stable and predictable, whether you’re a consumer or an insurance company.”
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By revising the “three-year rule” and implementing a “file-and-use” system for rate changes, the commissioner’s strategy seeks to make Louisiana a more appealing market for insurance companies, offering hope for relief to the state’s beleaguered homeowners as the legislative session approaches on March 11.
“The crisis we’re in is unlike anything that anyone that’s lived in the state has seen before,” Temple said late last month.
Louisiana’s homeowners have been caught in a relentless cycle of insurance premium hikes due to natural disasters, with rates soaring on average by 27 percent from May 2022 to May 2023, according to PolicyGenius’ Home Insurance Report issued late last year. The steep increase is a direct consequence of the state being hit by a series of hurricanes that wreaked havoc on the state.
Hurricanes Laura, Delta and Zeta in 2020 inflicted $10.6 billion in insured losses across Louisiana, according to PolicyGenius, leading to more than 320,000 claims by policyholders. The situation worsened with Hurricane Ida in 2021, which accounted for $13.1 billion in damages and more than 460,000 claims.
Adding to the state’s woes, Hurricane Ian in 2022 resulted in an estimated $30 billion in insured losses.
The consecutive years of destructive weather events have propelled the state into a deepening insurance crisis, culminating in 22 insurance companies either declaring insolvency or exiting the Louisiana market, PolicyGenius said in its report.
The void has pushed homeowners toward the state-funded insurer, Louisiana Citizens Property Insurance, as a last resort, which has resulted in higher costs for homeowners, given that Citizens was granted a 63 percent rate increase in 2022, and that it is statutorily required to charge 10 percent above market rates.
Temple’s plan is, in part, addressing the pressing need for a competitive market.
“I want you doing business in the state of Louisiana,” Temple said. “I want to work with you so that you can do business in the state of Louisiana because I want your competition benefiting the consumers and the state of Louisiana.
“[We’re going to] make sure the companies come in, they’ve got the right business plan, they’ve got the right management in place, they’ve got the right financial reserves, they’ve got the right reinsurance so that when a catastrophe happens, they have the financial resources.”
The commissioner, who was appointed in January, is advocating for the introduction of “file-and-use” legislation, a move that would allow insurers to implement rate changes immediately after filing, without awaiting prior approval.
The method, which is used in other states, promises to expedite the rate adjustment process, enabling insurers to react to the changing dynamics of the market and potentially leading to more competitive pricing.
“We’re not asking the Legislature, we’re not asking you as citizens, we’re not asking you as businesses to support, you know, experimental legislation,” Temple said. “These are all things that have worked, they’ve been proven to work in other states.”
The proposed relaxation of the stringent three-year rule, which currently restricts insurers from non-renewing policies arbitrarily after three years, is seen as another step toward making Louisiana an attractive market for insurance companies.
Newsweek reached out to Temple’s office for comment by email on Friday morning.
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