Thursday, July 17th, 2014
Baton Rouge, Louisiana
Why are Property Insurance Rates Going Up in Louisiana?
What on earth is happening out there? Is a major hurricane churning in the Gulf and taking dead aim at Louisiana? Is the Mighty Mississippi on the verge of overflowing its levees and about to flood thousands of acres, driving hundreds of thousands from their homes? Something drastic must be up. After all, State Farm Insurance Company just raised its rates on Louisiana homeowners by as much as 20%.
Note that I said that State Farm raised its rates. In most states, insurance companies are subject to a pre-approval process wherein the insurance department determines if the increase is warranted, so that the property owner can be assured that the increase is both fair and necessary. But Louisiana is different. In the Bayou State, insurance companies are not required to get rate increases pre-approved. So the answer to the question of how come big insurance companies can stick it to homeowners, whether or not such an increase is justified, is simply this — they do it because they can.
Back in the days when I served as Louisiana Insurance Commissioner, I worked with Texas Commissioner Bob Hunter on a variety of insurance issues affecting our respective states. Currently, he’s the Insurance Director for the Consumer Federation of America. I called him to get his view on the dramatically rising property insurance rates in Louisiana. “Puzzling,” he said. “A real outlier. Maybe a slight increase because of inflation. But such a big increase is really questionable.”
The national insurance reporting publications indicate why property insurance rates should be going down, not up. The FPN Insurance Journal reported that natural catastrophes caused less than half the damage this year compared to the past 10 year average. USA Today reports that we are experiencing one of the quietest years for hurricanes and other national disasters in many years. The Insurance Journal reported that insurance companies nationwide have seen rate reductions in the past three years. Continue Reading…………….