I’ve been in the industry almost 20 years, and I’ve seen the greatest changes of my career in the homeowners insurance marketplace here just since Hurricane Ida. But things are not just bad in Louisiana — I write in seven other states and all of them are being hit by price increases. This is an industry-wide crisis. Companies are pulling out of all the states as well, and they are seeing historic increases.
Unfortunately, Louisiana continues to be one of the highest states in the country for both homeowners and car insurance, leaving many homeowners and drivers grappling with how to manage their costs, yet have adequate coverage.
The primary factors contributing to rising insurance costs are natural disasters and climate risk, high repair and replacement costs, regulatory changes, fraud/abuse and lack of market competition.
In addition to the rise in natural disasters, the cost of materials and labor has risen significantly in recent years. When insurance companies evaluate their pricing, they consider the potential costs of repairs or replacements. This means that as the price of materials and labor continues to rise, homeowners can expect their insurance premiums to reflect these increased costs.
Insurance regulation in Louisiana can also impact pricing. The state has a complex insurance market, and changes in regulations or legislation can also cause pricing adjustments. Insurance fraud and abuse also remain significant issues. The Louisiana Department of Insurance works to combat fraud, but it remains a persistent challenge affecting overall insurance costs.
Lastly, Louisiana has seen several insurers exit the market due to financial instability or overwhelming claim volumes. This reduction in competition can limit consumer options and result in higher premiums as the remaining companies adjust their rates to maintain profitability.
Despite all the negativity with insurance in Louisiana, however, there are strategies homeowners and drivers can use to optimize their chance at saving some money.
Don’t Just Settle
One of the most effective ways to manage rising insurance costs is to shop around. Find a broker that can shop you through numerous carriers. Depending on where you live, the premiums and options vary widely. Keep in mind that newer homes and updated homes generally have greater opportunities and lower premiums.
While I have not seen a lot of new companies come into this market because of the legal atmosphere here, I have seen some companies that are already here start to loosen up a bit on their guidelines. We are also seeing some credits for fortified roofs that are helping a bit, but not as much as many people expect.
Stay Vigilant
Homeowners and drivers should regularly review their insurance policies to ensure they have the appropriate coverage. I used to advise doing this every three to five years; now I suggest every one to three years. Definitely shop your policies if you have an increase above 20% at the time of renewal.
There are numerous factors that go into insurance rates, so it is critical (now more than ever) to have a relationship with your insurance professional so you can talk through your complete situation.
The problem with auto insurance is that there is even less competition when it comes to carriers than with homeowner’s insurance thanks to high litigation costs and regulation. This is especially true when it comes to commercial insurance. We’re seeing some businesses really suffering as a result.
Take Smart Action
Wind mitigation surveys completed by an approved surveyor can impact your homeowner’s premium quite a bit. I’ve seen Louisiana Citizens policies reduced 30% to 40% thanks to a wind mitigation survey.
Adjusting deductibles can also sometimes lead to lower premiums. However, remember that it’s important to balance lower premiums with sufficient coverage to avoid financial strain in the event of a loss.
When it comes to auto insurance, outside of having a good driving history, I advise people to self-insure small claims. If you don’t, you’ll likely see premium increases amounting to double what your out-of-pocket expense would have been to just pay for the damage yourself. While I’ve seen driver monitoring devices help with lowering costs, keep in mind that they can also hurt, depending on your driving habits. If using them with teen drivers, I highly recommend explaining the importance of safe driving because it can negatively affect your premiums if a driver is reckless during the monitoring period.
Stay Informed
Staying informed about legislative changes, regulations and laws in Louisiana can help homeowners and drivers understand how these changes might impact their premiums. I encourage everyone to voice their concerns on these matters to their local representative.
The rising costs of homeowners and auto insurance in Louisiana present a significant challenge for many residents. By understanding the contributing factors and taking proactive steps to manage expenses, owners can be better prepared. Staying informed and proactive is key to ensuring that you have the right coverage at the best possible price, allowing you to protect what matters most.
Shana Roig is the owner and principal agent of Legacy Insurance. She may be reached via email at shana@legacyinsla.com or by calling (985) 590-4342.
