Louisiana is an unprofitable place for insurance companies to write policies
- In both Homeowners and Auto insurance (especially in Commercial Auto) insurance companies are losing money because of higher claims costs compared to other states.
- This graph shows the average “Combined Ratio” for insurance companies writing commercial auto.
- In 2022, for each dollar they collected from policyholders, commercial auto carriers paid out $1.16.
- And that was their best year out of the previous 5!
Homeowners insurers have sustained massive financial losses in Louisiana
- This graph shows the total dollars in vs dollars out for Homeowners insurance companies in Louisiana for the period from Hurricanes Katrina/Rita in 2005 until Hurricanes Laura/Delta/Zeta in 2020 and Hurricane Ida in 2021
- Although they were profitable in the individual years between those separate sets of history-making storms, they never recovered all the money they paid out in Katrina.
- They were still over 2 Billion dollars “in the red” when our state was hammered by the historic storm seasons of 2020 and 2021
- Total annual Louisiana Homeowners premiums are $20 Billion. Louisiana Homeowners insurers lost $13 Billion between 2005-2021.
- Long story short – in Louisiana insurance companies are paying out more in claims than they are collecting from policyholders. They are losing money in our state!
Part of the cause for our high insurance rates is our geography: the damage caused by hurricanes makes Homeowners insurance more expensive in coastal states.
However, insurance is significantly more expensive in Louisiana than in our neighboring coastal states, including: Mississippi, Alabama, and coastal areas of Texas. This is driven, in large part, by the frequency and size of lawsuits in Louisiana.
Homeowners
- Louisiana citizens are 12 times more likely to sue their Homeowners insurance company than policyholders in other states.
- After Hurricanes Laura, Delta, Zeta, and Ida, between 7 – 9% of people filing claims sued their insurance company, approximately an 800% increase from historical averages.
- The average hurricane claim in Louisiana cost insurance companies 50% more than similar claims in other coastal states.
Auto
- The cost to repair damaged vehicles in Louisiana is in line with the national average.
- However, Louisiana policyholders file claims for injuries after a wreck almost twice as often as the national average.
- The average amount paid per injury claim is 59% higher in Louisiana than the national average.
- Louisianians are more than twice as likely to sue for injury damages after an accident than the national average.
This excessive litigation drives up costs for insurers which is passed on to Louisianians in the high price of insurance
This is why we pay more for insurance than people in other states
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