Monday, February 14th, 2022

Baton Rouge, Louisiana


Louisiana homeowners know a good bit about suffering, particularly when it comes to being stuck with the highest property insurance rates in the nation. The Clark Research Group determined that Louisiana has some of the highest insurance costs, coming in at an average of more than $6000.00.  No other state in the South comes close. If you live in industrialized New Jersey, the cost is $1,318.00, a drop of some $300.00 in the past 10 years. California, with wildfires and massive rain caused mudslides pays an average of $1,988.00.

But that’s not the whole story.  Two years ago, Congress merely put its finger in the flood insurance dike with legislation that supposedly capped the skyrocketing rates of property owners in flood prone areas.  But what our minions in Washington didn’t tell us is that the rates are continuing to climb dramatically.  News reports across this state just his past week reported that flood insurance rates in Louisiana will rise more than 129% over the next decade with many policyholders seeing an increase of more than four times what they are currently paying.

Because of the devastating hurricanes that seem to hit the gulf coast at least once a decade, the federal government has bailed out these southern states, literally and financially, time and time again. Some cynical members of congress have even suggested that it’s time for many homeowners to relocate.

A few years back, Allstate Insurance Company suggested the creation of a state run money pool to limit how much all property insurers would have to pay when a hurricane hits the state in the future. But here’s the problem. Who pays for the pool? You guessed it. Every property owner in the state through a new assessment. So the rates continue to go through the roof with no relief in sight.

Actually, the Allstate plan wasn’t such a bad idea if you go back a few years. But the legislature and the insurance department mistakenly went a different direction creating this monster called the Citizens Property Insurance Company, and the state missed the chance to contain property rates and create a much healthier insurance climate.

Let’s get one thing straight that we can all agree on and makes it worth talking about. Property insurance is a necessary evil, and every property owner must have it. And nobody’s happy over the present way the system works.

Under the purposed Allstate plan, a new assessment would be put on every property insurance policy sold, with the money going into a state rainy day fund for when a major hurricane hits. Several formulas might be used, but the idea would be to limit how much any one insurance company would have to pay out. In return, property insurance rates would be curtailed.

The same plan was suggested by the insurance department back in the 90s, and it made much better sense then. No one worried about the ‘big one” actually happening, and the legislature wasn’t receptive to any kind of assessment. But in the past four years, new state proposals have been the prime cause of property rates going sky high.

First of all, the Louisiana Legislature gave the insurance industry the right to raise every rate 10% a year without any approval. And is it any surprise that company after company did just that, whether needed or not? All rates above 10% have to be

Then the legislature really went off the cliff and created a state run company without any money injected into it. There should have been a minimum injection of well over $50 million just to get this concept started. No significant re-insurance was required in the law creating the program, which was a huge mistake, and one that every property owner will be paying for over the next 20 years. And finally, you need insurance professionals to run such a state created company. Experienced professionals were woefully lacking in the make-up of Citizens.

So with no reinsurance in place to cover the Katrina costs that now have exceeded one billion dollars, the state borrowed the money and you and I will pay this indebtedness off, year in and year out, for the next twenty years. This adds an additional 20% to the average insurance policy.

Now Allstate is saying just add a little more. But is such a plan, if the Governor and the Legislature decide to go along, going to literally price insurance beyond the reach of the average homeowner? It’s getting close to that point. So what do you do?
Four things.

Completely restructure the Citizens state created company. Bring in professionals with strong insurance management backgrounds to run it professionally, with a requirement that there be no contributions to any politician involved. Louisiana followed in lock step with a similar Florida plan that is about to implode with similar problems.

The Governor should bite the bullet, and recommend the injection of $100 million in state funds to stabilize the Citizens concept. Florida has. injected over $700 million dollars. Mississippi has appropriated $50 million to help their rates drop. Louisiana has not appropriated one penny.                                    

Make reinsurance mandatory for property insurance companies up to 80% of any anticipated losses. If this had been done pre-Katrina, this present crisis would have been greatly reduced

Give the Allstate suggestion a good review. It’s not that bad of an idea, but the defect is that Louisiana is much too small to go it alone. The Governor should start immediate discussions with Texas, Mississippi, and Alabama to form a joint pool. Leave out Florida for they have too much future risk. If a joint effort had been in place pre-Katrina, the present crisis would have been greatly reduced.

But the most important idea is for the Louisiana congressional delegation to join the Governor in proposing what the country did after 9/11. Form a national catastrophic fund that allows any state that faces a national disaster to join in. Oklahoma for tornados, California for earthquakes, flooding protection in the Midwest, and of course hurricane protection for coastal states. If New York could demand it after 9/11, you would hope there would be substantial support for a national catastrophic plan because of a; the recent natural disasters across the nation.

The Louisiana Legislature should authorize the forming of a Joint Underwriting Association for Louisiana businesses. Any business could join and pay a monthly assessment that would be used to buy re-insurance for the Association. This is a short term fix, but would buy some time for many businesses who cannot find affordable insurance until the other proposals listed above take effect.

None of this is that original or rocket science. It’s a matter of emphasis. And the Governor obviously has to become involved. In all but twelve states, the Insurance Commissioner is appointed. So congress will look to Governors to aggressively pursue these important concepts. There are ways to resolve this major insurance crisis. But it will take more focus and much stronger leadership. Isn’t the time right?


One of the tests of leadership is the ability to recognize a problem before it becomes an emergency.

Arnold Glasgow

Peace and Justice

Jim Brown

Jim Brown’s syndicated column appears each week in numerous newspapers throughout the nation and on websites worldwide. You can read all his past columns and see continuing updates at




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