NEW ORLEANS — We've all seen the damages in Florida from Hurricane Ian, and know the same could have happened in Southeast Louisiana.
Some insurance companies have pulled out of Louisiana because of past hurricane damages at home.
So how will these new Florida insurance claims affect our rates?
The insurance commissioner says if we can just get through October without costly hurricane damage, he is starting to get interest from insurance companies who want to come back and do business here again.
But here's what you can expect with your homeowners insurance. This is not about the new 2.0 flood insurance increases.
The state insurance commissioner says you should expect your homeowners insurance rate to increase. The question is will it be a little or a lot? He says that it all depends on the cost of Hurricane Ian's damages in Florida.
“If it's (similar to) Ida, then it will not have a significant effect on rates. If it's twice (as high as) Katrina, it will have a dramatic effect increasing costs on homeowners insurance, and commercial property insurance in our state, the state that is most vulnerable to hurricane events,” said Louisiana Insurance Commissioner Jim Donelon.
Insurance agent, Stephen Lovecchio says inflation of building materials is causing an increase. One quote he just got on a client went from in the $3,000 range to the $21,000 range. He agrees next year’s premiums will be higher than this year's.
“After hurricane Ian hit Florida, there's only a finite amount of money for hurricane risk in the gulf coast region of North America, and I think Ian just took it all,” said Lovecchio, who runs Lovecchio Insurance Agency in New Orleans.
Here's why: There are only about a dozen big reinsurance companies worldwide. The companies we deal with all buy their insurance from them. And that cost of reinsurance is going up. And keep in mind they are covering natural disasters across the planet, and only have so much money in reserve.
“They'll give you the money, and they'll pay the claim, and they've paid every claim ever since they've been around for 300 years, but they need to get their money back quick, because they're waiting for the next one,” said Lovecchio.
He says Louisiana needs to incentivize private insurance companies to sell here. In the free market, competition drives prices down. Also, you may see hurricane deductibles go higher. And all the lawsuits in Louisiana and Florida cost insurance companies money, and tie up claims for years.
“We now have the highest property rates in the nation, and we're not a rich state. A larger percent of people's incomes go to pay for insurance to live in Southeast Louisiana,” he noted.
So what can you do.
1. Get an agent who can shop both home and flood insurance for you. There is no out-of-pocket cost for that.
2. Some are now combining pieces of coverage from different companies to get you a lower rate.