A new report shows that last year, the number of Louisiana homeowners having their insurance policies cancelled by their insurance companies increased more than fivefold compared to 2018. Real Reform Louisiana Executive Director Ben Riggs says insurance companies are cancelling policies mainly for financial reasons, mostly south of the I-10 corridor.
“Insurers are canceling these policies, because they’re just trying to shed as much risk as they possibly can and increase their profit margins,” Riggs said.
Riggs says that’s forcing those homeowners either to the more expensive Citizens Insurance, which is the homeowners insurance of last resort, or to smaller insurance companies which are often Demotech-rated companies that are 30% more likely to go insolvent following a major storm.
“After a major storm, those types of companies are less likely to stay in business and cover their policyholders’ loss, which could be devastating for a state like Louisiana,” Riggs explained.
Riggs says Demotech-rated companies represent 1/3 of all homeowners insurance premiums written in Louisiana.
He says the phased-in repeal of the so-called “three-year rule” started at the beginning of this year, and that will exacerbate the issue.
“The previous insurance commissioner called the three-year rule Louisiana strongest consumer protection. It prohibited insurers from canceling policies that were called ‘legacy policies,’ where they had been in effect for more than three years,” Riggs said.
Comments