The cost of home insurance in Louisiana has spiraled out of control despite relief efforts by lawmakers.

What’s happening?

Rate hikes are forcing Louisiana residents out of homes in coastal areas and contributing to the shortage of affordable housing in metro areas. Louisiana Insurance Commissioner Tim Temple called it the “biggest crisis our state faces,” per NOLA.com.

Temple, a former insurance executive, has advocated to make it easier for insurance companies to drop policyholders and raise rates. He believes fewer regulations will attract more insurers to the state, fostering competition to drive down rates.

According to polls, high home insurance costs are the No. 1 concern in the state, especially in South Louisiana, where a series of hurricanes wreaked havoc on the insurance market.

Last year, several bills intended to make Louisiana friendlier to insurance companies were approved. Despite this, rates continued to rise. Policyholders have experienced a 9% rate increase since the laws were passed, per NOLA.com.

“The rates are just so high. It might be the highest thing in their escrow, more than their house note,” state Rep. Jacob Braud said.

Why is the Louisiana home insurance crisis important?

Louisiana is reliant on the reinsurance industry, which has been severely impacted by escalating global catastrophes caused by rising temperatures. 

Human activities, mainly the continued use of dirty energy sources such as gas and coal, create planet-heating pollution, which has contributed to the uptick in these extreme weather events. Extreme weather events have always existed, but rising global temperatures have supercharged them. Not only do these events endanger communities, but they also exact a huge monetary toll. 

Extreme weather events, including hurricanes and wildfires, result in billions of dollars in damages and have upended insurance markets worldwide. In response, insurers have raised rates and dropped policies, leaving homeowners unable to find insurance.

The problem is not unique to Louisiana. One study found that millions of property owners in vulnerable states such as North Carolina, South Carolina, Florida, Texas, and California will have higher insurance premiums because of an increased risk of floods, wildfires, and high winds.

Insurance companies use predictive “catastrophe models” to simulate disasters and estimate their costs. In high-risk areas, this has led some insurers to halt coverage altogether. 

This left many Californians uninsured and unprotected during January’s devastating wildfires. 

What’s being done to provide relief for Louisiana homeowners?

Louisiana lawmakers are pushing for additional relief for homeowners. 

“Everybody I know who has a house is fed up paying these high premiums,” state Sen. Patrick Connick told NOLA.com. Connick proposed a bill that would require insurers to report more information about their finances, including transactions with affiliates. 

State lawmakers have put forward dozens of bills in an attempt to ease the financial burden on homeowners. 

According to NOLA.com, one would provide tax credits for a portion of a homeowner’s insurance premiums. Another bill would allow homeowners to reduce coverage to only the unpaid principal balance of their mortgage, rather than maintaining coverage for the full value of their home. While this would result in lower premiums, it would also leave people with less protection.

Louisiana hopes providing premium discounts will incentivize homeowners to take preventative measures, such as installing fortified roofs less likely to be blown apart during hurricanes. 

Lawmakers are also trying to increase oversight. Others have pushed for a federal solution, similar to the National Flood Insurance Program.

Some states have taken measures to protect residents after extreme weather events. California passed a law to prevent insurance companies from canceling coverage of wildfire victims.

A couple of the proactive things people can do is explore critical climate issues and help reduce reliance on dirty energy sources that exacerbate planet-warming pollution.

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