May 21, 2022
  • May 21, 2022

Insurance agents are nervous about the property insurance market

By on November 11, 2021 0


Hurricane Ida(Andrés Fuentes)

NEW ORLEANS (WVUE) – With much of Louisiana in need of reconstruction due to strong winds from Hurricane Ida in late August, the state property insurance market is shrinking.

Longtime independent insurance agent Ross Fayard of the Amstate Insurance Agency said rates have already increased for many policyholders due to back-to-back hurricanes last year in southwest Louisiana.

“My concerns are very alarming,” said Fayard.

He said there are few options for people who cannot afford the higher premiums.

“My heart is aching for them; some people call me and say my premium was $ 1,400, now it’s $ 4,000. Okay, let’s go shopping. There is nobody there and the problem is that even though the rate is high it is the only thing available so if they sign a cancellation and go look elsewhere and they cannot get insurance anywhere else , I can’t get them back at this rate because these companies no longer write, ”said Fayard.

Ben Albright, vice president of strategic initiatives with Louisiana Independent Insurance Agents and Brokers. He said state insurers were under pressure. “They’ve had a claims bath over the last couple of years, last year with Laura, Delta and Zeta, the loss rate for property insurers or homeowners in Louisiana was around 250%, so no one Really making money and we expect to see pretty bad loss rates this year, ”Albright said.

And this is pushing some insurers to withdraw from the state.

“It’s difficult for a number of reasons. We have some who are withdrawing from the state and a few others who have financial problems. We only heard about two yesterday that the department went into receivership, it could mean pardon, that’s what we’re hearing, or it could be liquidation down the line, ”Albright said. .

Add to that the impact of reinsurance.

“Most insurers of coastal homeowners are heavily reinsured, they have insurance on top of their insurance and the reinsurance market is really bad right now because disasters are happening all over the world,” Albright said.

Fayard agrees.

“The looting and the riots and all that kind of stuff that humans guess who’s paying for it?” Reinsurance, they’re going to pay for that, so when their insurance pays for that, it trickles, it’s everywhere, ”he said.

Even before Ida caused catastrophic damage, some insurers were feeling financial stress.

“We had Gulf Stream become insolvent at the end of last year and they are completely out of the market now and these policies have all now transferred, GeoVera Insurance recently pulled out, FedNat said they would not start not up for renewal in January and they also own Maison Insurance here in Louisiana, then the two that went into receivership were State National and Access Home, we’re there are a few more that the department is monitoring, ”said Albright .

Fayard says he deals with dozens of insurance companies looking for policies for clients and that few are in the process of writing new policies.

“You don’t have a lot of choice and that’s what I’m trying and, people don’t understand that, I mean, insurance companies, they’re not here to waste money, you know, they want to be productive, they want to give you a good rate, but they’re also not here to waste money, I mean we can’t control what Mother Nature is doing, “Fayard said.

And higher premiums are already expected next year.

“The honest truth is that insurance statewide is going to increase,” Albright said.

FOX 8 asked the American Property Casualty Insurance Association about some of the main factors that influence a state’s attractiveness to insurers.

Nicole Ganley, senior director of public affairs at APCIA, responded by email that “insurers need to be able to assess and manage their risk. Natural disasters happen, that’s what insurance is for. Insurers need tools to be able to understand their risk in order to be able to balance their business volume, settle claims and manage solvency. Healthy competitive markets provide consumers with the best choice of products that meet their needs.

He was also asked if the effects of climate change could cause the insurance market to contract nationwide.

“Insurers are working to adapt to climate change. Disasters are more and more frequent and intense. Insurers use new technologies to assess and cover risks. We can maintain a competitive insurance market that offers more choice to consumers as long as insurers can anticipate the risk they are taking and manage their risk, ”she said.

Albright was asked if relief was expected for policyholders.

“It actually depends. Insurance tends to be very cyclical where insurers start making money and the prices go down and they go down and then all of a sudden there are claims and the prices go down. , and they get less bonuses and they take more losses, and then they go and that’s when the prices go up, ”Albright said.

He thinks the costs will come down eventually.

In the meantime, Louisiana has an insurer of last resort.

“We think if a number goes down we can end up investing a lot in the citizens of Louisiana which is the market of last resort and that doesn’t lead to a competitive environment so we would be in trouble,” Albright said. .

Fayard hopes the companies and agents he knows can hang on. “It’s scary, it really is, I got some buddies in the business, and they said, man, I hope I’ll be with my business next year.” FOX 8 asked the American Property Casualty Insurance Association about some of the main factors that influence a state’s attractiveness to insurers.

Nicole Ganley, senior director of public affairs at APCIA, responded by email that “insurers need to be able to assess and manage their risk. Natural disasters happen, that’s what insurance is for. Insurers need tools to be able to understand their risk in order to be able to balance their business volume, settle claims and manage solvency. Healthy competitive markets provide consumers with the best choice of products that meet their needs.

He was also asked if the effects of climate change could cause the insurance market to contract nationwide.

“Insurers are working to adapt to climate change. Disasters are more and more frequent and intense. Insurers use new technologies to assess and cover risks. We can maintain a competitive insurance market that offers more choice to consumers as long as insurers can anticipate the risk they are taking and manage their risk, ”she said.

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