Some of the latest estimates of privately insured losses from Hurricane Ian have projected the devastation to cost $67-billion, and that is not including flood insurance. On Monday’s Newell Normand Show, Newell said the recovery/rebuilding efforts in Florida are a sober reminder of the deteriorating insurance market here in Louisiana. Following the recent consecutive years of hurricane and tropical storm landfalls in Louisiana, the number of insurance companies willing to write policies within the state has dramatically dropped. Newell said taxpayers should press their local and state leaders to find a way to get more private insurers into the state or run the risk of having the cost of living spiral out of control.
“The problem is as we have all of these insurers leaving the state one after the other after the other, you don’t have a mortgage market because to get a mortgage from a bank you got to have insurance. If you’re not able to procure insurance, then there is no mortgage market because they’re not going to take the risk,” said Newell.
Newell is also sounding the alarm about the state of Louisiana welcoming companies that lack enough capital to respond and rebound from an event that would require insurance. From Newell’s point of view, those companies could adversely affect the availability of insurance for many people and businesses. It requires political leaders to be innovative in how they approach insurance. “We need to think out of the box. We need to get all over this. We need to figure out how to divide this state up geographically, how we evaluate new companies coming, are they appropriately capitalized or not,” Newell said.
Newell warned that as more companies unload more of their liabilities to the secondary insurance market, the secondary market itself becomes increasingly hesitant in providing coverage. Since several insurance companies have left the Louisiana insurance market, the smaller and secondary insurance players are the only ones left standing for homeowners or business owners can turn to for property insurance. Newell fears the stress on that secondary market could force it to falter.
“Once the secondary market leaves us folks, there’s no salvation here. None at all. When you think about the largest insurers in some of the areas in and around the city of New Orleans where they’re not writing (policies) at the present time, they are out,” Newell said.