NEW ORLEANS — A massive rate hike, long dreaded by homeowners in Louisiana, has been approved.
Starting Jan. 1, Louisiana Citizens residential property insurance will go up 63%.
This hike was requested and approved by the state Insurance Commissioner Jim Donelon. The initial request to increase the rate was sparked by insurance companies pulling out of Louisiana after a string of Hurricanes from 2020 to 2021.
Most companies that left could not keep up with the claims in the aftermath of Hurricane Ida. Citizen insurance is the last resort for those who have lost their insurance for one reason or another. It was the only option for many residents once their providers left.
To put things into perspective, before Hurricane Laura in 2020, about 35,000 people had insurance policies with the state. Today that number has more than doubled with 100,000 people getting their insurance from the state.
The hike will go into effect on the date your policy is renewed. In a media release 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."
The state law Donelon is referring to requires the Citizens' rate to be 10% higher than the highest market value in each parish. The state is encouraging policyholders to "contact multiple independent insurance agents at least monthly to request quotes from private insurers."
If you have Citizens and you find a new policy before your policy with the state ends, they will refund your unearned premium.
Donelon is now planning to restart a state program to offer financial incentives to attract more insurance companies, with the hope that the private market will eventually bring down the prices. He said this was "extremely successful" following hurricanes Katrina and Rita.