The Louisiana Department of Insurance (LDI) has approved Louisiana Citizens’ request for a 63% rate increase on its residential property insurance policies beginning January 1, 2023.
According to a statement from the LDI, the increase will not affect current policyholders of Citizens until they renew their policy after that date. Citizens is the state-backed insurer of last resort.
It also said that the rate increase is almost totally a result of the increased cost of reinsurance for Citizens’ increased number of policies this hurricane season. The best way to reduce the burden of this and future Citizens rate increases is the Insure Louisiana Incentive Program, which is awaiting funding from the legislature.
Commissioner Jim Donelon said: “There’s no sugarcoating it — this increase is extremely painful but required by law to make sure Citizens can handle a potential future disaster for its many policyholders. My staff and I are working with the legislature to attract more insurers to the state through the use of a program that was highly effective following hurricanes Katrina and Rita, which will give Citizens policyholders, and all Louisianans, more and cheaper insurance options in the private market.”
Louisiana Citizens filed for the rate hike in the middle of September. Reporting back then stated that the corporation had 114,000 policies at the time, up from 37,000 in the previous year. It is understood that many insurers have left the state or become insolvent, forcing many citizens to turn to the state’s insurer of last regard. The ballooning in the number of policies has led to Donelan setting a goal to get more companies writing business within the state, heightening competition, and bringing down prices.
Donelon said in September: “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. (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.”
