Insurance reform bill approved by legislature leaves Louisiana homeowners nervous

NEW ORLEANS (WVUE) – Some homeowners say they fear what will happen to their property insurance coverage, now that the legislature has voted to repeal an insurance-related protection they have counted on for years.

House Bill 611 won final legislative approval this week. It repeals a longstanding rule that bars insurance companies operating in Louisiana from dropping policies that have been in place for at least three years.

“Actually, if you’re a longtime customer, I don’t think it’s proper, you know?” said a New Orleans-area resident who did not want his name used.

Gov. Jeff Landry is expected to sign the bill into law. And if so, starting in January, insurers would be able to cancel up to 5 percent of their policies each year for any reason. And upon request by insurance companies, Insurance Commissioner Tim Temple could allow them to cancel more than 5 percent of policies.

After Hurricanes Laura and Ida devastated parts of Louisiana, some insurers failed financially while others stopped writing policies in the state. Temple has said doing away with the so-called “three-year rule” will help attract new insurers.

“Right now, this is somewhat of a gamble,” said veteran insurance agent Dan Burghardt. “You know, I’m not going to say it’s a lead-pipe cinch where companies are going to come in. But you have to create the atmosphere first.”

Burghardt said he believes having more insurers doing business in Louisiana will eventually lower premiums.

“How do you fix a problem when rates are out of control? You bring in competition. Competition solves pricing, in most cases,” Burghardt said.

However, the newly retired resident Fox 8 spoke with said he has been with his insurer for decades and does not want to lose his policy on a whim.

“I know some people switch back and forth a lot,” he said. “But somebody like me — that’s been (with) the same insurance for 20, 30 years — and they want to come by for no reason at all, without (me) filing claims or anything, I think that’s a problem.”

Burghardt says insurers take into account the age of roofs on properties they are considering for coverage.

“Mold, sheetrock damage, internal damage to the house takes a roof claim and brings it to the next tenth power,” he said. “So, having a new roof is your first line of defense. And having a new roof is worth discounts. Right now, discounts are up to 20-30 percent for 5-year, maybe 10 percent up to 10-year new roofs.”

Still, some homeowners fear if large numbers of properties end up losing coverage next year and beyond, insurers could take advantage of the situation.

“Then rates probably are going to go up, you know,” the resident said. “Because once you have a shopping spree going on.”

But Burghardt said he thinks those who end up getting dropped will be able to find new coverage outside of Louisiana Citizens, the state’s insurer of last resort.

“There’s other options that insurance agents like myself have available, that meets the risk in which they have become,” he said.

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