Louisiana Citizens proposes 63% homeowners insurance rate hike for 2023
NEW ORLEANS (WVUE) - Policies continue to balloon for Louisiana Citizens, the state’s homeowners insurer of last resort, leading the corporation to file for a 63 percent rate hike on all new or renewed residential policies as of Jan. 1, 2023.
Louisiana Insurance Commissioner Jim Donelon said at a town hall meeting Monday (Sept. 12) in Jefferson Parish that Citizens is currently at 114,000 policies, up from just 37,000 in 2021.
As insurance companies continue to flee Louisiana, either becoming insolvent or refusing to write new policies south of I-12, more homeowners are being forced onto the state-backed insurer of last resort.
Donelon said his goal is to get more companies writing policies in Louisiana, in order to stoke competition and drive down premiums.
“We have plans in place to depopulate Citizens, and have significant interest being shown by companies that are anxious to get those policies out of Citizens,” Donelon said. “(These are) solvent companies that are looking forward to doing business -- competitive business -- with each other in the property insurance market, even below I-10 and I-12.”
Donelon said he plans to impose a program that has not been used since the months and years following Hurricane Katrina, incentivizing private companies to start writing policies in the state.
He said the groundwork is being laid, but that funding from the state legislature will be needed.
State Senator Cameron Henry told the small crowd that he, Donelon and State Sen. Kirk Talbot had been working with other lawmakers at the state capital to “kick-start” that program again.
“Within six months is our expectation, and start taking tens of thousands of policies out of the Citizens’ book of business,” Donelon said.
The commissioner said his office will have to analyze the Citizens’ rate hike filing, which will take around 3-4 weeks, before deciding whether to approve the increase. He said the analysis would be based on two metrics: the actuarial cost by parish, as well as the rates being offered by private insurers writing policies in that parish.
The current state of the global re-insurance marketplace is contributing to the need for higher rates, Donelon said. As Citizens takes on more policies, it must take on more re-insurance to account for the newly accrued risk.
“Re-insurance is an international market that (insurance companies) buy to ensure their risk against the next Ida event,” Donelon said. “Those rates have gone up dramatically over the past two years.”
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