Louisiana homeowners remain stuck on safety net insurer |

Nearly 15 years ago, Gerard Braud and his wife bought a raised cottage home in Mandeville, nestled on a sprawling yard with a live oak tree overlooking Lake Pontchartrain. He thought they would spend the rest of their lives in it.

Life was affordable. His insurance premium with Lighthouse, a small company based in Louisiana, was around $4,400 a year.

Then the storms came.

He managed to avoid major damage from Hurricane Ida and other storms that hit south Louisiana in recent years. But Lighthouse went belly up in 2022, one of 12 insurers doing business in Louisiana to fold in the two years after Ida.

Four years after the storm, he still can’t find anyone willing to write him a policy.

That forced Braud to get insurance from the state’s insurer of last resort, Citizens, which charges him north of $12,000 a year for home insurance, triple what he paid with Lighthouse. His flood insurance — a separate system handled by the federal government — has soared as well.

“My house has gone from affordable when I moved in to unaffordable now,” Braud said.

After the rash of insurer failures, the number of people forced to turn to Citizens for insurance skyrocketed from about 35,000 to a peak of 140,000 in the summer of 2023, the organization’s data show.

But more than two years later, and despite changes in state laws and insurance regulations from Insurance Commissioner Tim Temple, the number of Louisiana homeowners with Citizens insurance remains stubbornly high. And the amount of money those people — and residents with private carriers — are paying for insurance has not come down significantly.

Citizens, a nonprofit controlled by a board of state officials and insurance executives, has tried to get people off its rolls and onto the books of private insurers. But while it has sent 30,000 people to private insurers through a process called depopulation, its total number of policies has only fallen by about 18,000, or 13%, since the peak. In all, the number of policies is still up more than 200% since Ida.

The halting recovery underscores the enduring nature of Louisiana’s insurance crisis, which continues to crush homeowners in south Louisiana.

It also raises questions about whether Louisiana will ever return to the point when only a small share of properties are covered by Citizens, or whether tens of thousands more people will be stuck long-term with the insurer of last resort. Before the storms began hitting in 2020, only 35,000 homeowners — largely with the riskiest properties in the state — were on its rolls.

Carolyn Kousky, executive director of the nonprofit Insurance for Good, said insurers of last resort like Louisiana Citizens are important backstops to the cyclical nature of insurance, where storms, inflation and the reinsurance market can affect prices. But they can’t “magically make insurance cheaper in high-risk areas,” she said. The solution should be building homes that can better withstand hurricanes and other perils, which are becoming worse because of climate change.

“That risk of southern Louisiana is the fundamental challenge,” she said. “It’s so much harder to solve and it’s only getting worse.”

Braud has thought about turning to a different type of insurance, known as the “surplus lines” market, as a reprieve. Those insurers traditionally cover hard-to-insure property like antique automobiles, but have captured a small but growing share of the homeowners as well. The tradeoff is that the companies aren’t backed by the state guaranty fund, meaning homeowners may not have any recourse if they go insolvent.

As of now, that’s not a risk Braud is willing to take. As he and his wife picture their future, they wonder whether they can afford to stay at their Mandeville home long-term.

“We moved in here hoping this would be our forever home; this would be our last home,” Braud said. “Now, we’re really looking at that option of, do we need to move north of I-12, where presumably insurance rates are a little lower? And what does that look like?”

‘Not as fast as anyone wants’

After Hurricane Katrina, Citizens had a similar explosion in policies. But the insurance crisis following the most recent spate of storms since 2021 has been far worse in scope.

Four years after Ida, Citizens’ policies are still more than double what they were before. And while Citizens has moved thousands of people to private insurers through depopulation, where private carriers take policies in bulk, a significant number of people have come onto the rolls of Citizens in the meantime.

In normal times, Citizens is not a desirable insurer. By law, it must charge 10% more than private insurers, a longstanding policy aimed at encouraging homeowners to find coverage elsewhere if they can.

But after watching the dramatic rise in policies, Republican state lawmakers and Temple agreed last year to suspend the 10% surcharge for three years to give homeowners a reprieve. Democratic lawmakers had initially pushed for the suspension.

Temple said that change may be encouraging some people to remain on Citizens, which sometimes offers better terms on deductibles and coverages than private market policies.

Plus, some agents and policyholders are hesitant to move to one of the small insurers that are writing policies in Louisiana, especially after 12 insurers that were mostly small and undercapitalized went belly-up in recent years. Many of the companies most active now in south Louisiana don’t have the “gold star” of ratings from AM Best, a ratings agency, and are instead rated by Demotech, which researchers have found offers a less ringing endorsement of financial health.

Another factor: The private insurance market is not bringing widespread relief.

Temple said he still believes a series of laws and regulations from the past two years will succeed in inviting more competition and benefiting the market by making it easier for insurers to raise rates and drop policyholders. But while Louisiana has not seen huge rate hikes this year, rates are still projected to tick up by about 4% in 2026.

He also said he expects Louisiana will eventually get back to the point where only around 35,000 people are covered by Citizens. As of November, more than three times that amount were on the rolls.

“It’s not as fast as anybody wants,” Temple said. “But people are starting to see the success of the 2024 reforms.”

Hesitance and risk

Citizens has gone through several rounds of “depopulation,” shedding policies in bulk to private carriers. That’s how Citizens rapidly decreased its policy count in the years after Katrina.

But the process has been halting at times. After dumping 10% of its policies about a year ago, the rolls for Citizens climbed by about 4% since.

One company, Cimarron Insurance, was set to take out nearly 9,000 policies next month. But the company dropped out abruptly before the Citizens board certified the latest round this month. Temple said he did not know why, and the company didn’t respond to messages seeking comment.

Ben Albright, head of the Independent Agents and Brokers Association of Louisiana, said the Citizens policy count hasn’t moved down as quickly as he would like, something he blamed partly on the suspension of the 10% surcharge. He also said that until larger players enter the market, some policyholders and agents will hesitate to get insurance from smaller companies, fearful of a reprise of the failure of 12 insurers in recent years.

“If you can be with a trillion dollar company that’s AM best A-rated, that’s the best-case scenario,” he said. “There’s not a lot of those writing in south Louisiana.”

Kousky, who has published a host of research on disaster insurance, said reforming the nation’s property insurance system is tricky. On the one hand, inviting competition into the market is good for consumers. On the other hand, going too far in making life easy on insurance companies can hurt consumers when it comes time for insurers to pay claims.

The bigger challenge for a place like south Louisiana is that it’s increasingly risky to live here as climate change brings more powerful hurricanes, more rainfall and warmer waters in the Gulf, Kousky said.

And the prospect of a federal solution raises sticky questions. For instance, many insurance scholars and elected officials believe it’s important for the market to send price signals that encourage people in the riskiest parts of the country to fortify their homes or move.

In the meantime, Kousky said Louisiana and other states should embrace solutions like fortified roofs.

A recent report by Kousky and other researchers on insurers of last resort around the country found other states are taking several steps to make homes more resilient. Those include requiring Citizens to put fortified roofs on the homes of policyholders when they’re paying for a new roof after a loss. Alabama, Mississippi and North Carolina have versions of that policy, but Louisiana does not.

Such policies can also help get people off the rolls of the insurer of last resort by making their home more desirable for insurers to cover, she said.

“North Carolina, Alabama, when they invest in home fortification, that’s actually a takeout plan,” Kousky said. “Once your home is fortified, you’re more insurable in the private sector.”