New Orleans realtors ask state insurance commissioner to delay requested Louisiana Citizens rate hike

Published: Sep. 20, 2022 at 11:11 PM CDT
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NEW ORLEANS (WVUE) - New Orleans realtors are asking state Insurance Commissioner Jim Donelon to delay approval of a requested 63 percent rate hike for more than 100,000 homeowners who have policies with Louisiana Citizens, the state’s insurer of last resort.

“It affects affordability,” said Cody Caudill of Keller Williams New Orleans. “So you have rising rates -- interest rates, flood rates -- and now were talking home insurance rates.”

Caudill is part of a coalition of realtors trying to figure ways to stabilize the city’s housing market. For months, they have seen more and more prospective homebuyers unable to afford the houses listed for sale.

“That’s what we saw in July,” he said. “We saw a lot of deals fall out because they weren’t thinking about (homeowners insurance). Agents were thinking about it. We saw normal home prices with previous rates that were $2,500, and the lowest was $6,500. And that was Citizens, all the way up to $12,000 for a normal home in New Orleans.”

With more insurance companies pulling out of the state, becoming insolvent or simply refusing to write policies south of Interstate 12, Louisiana Citizens exploded from around 37,000 policy holders last year to more than 114,000 this year.

To cover that added risk and the high price of re-insurance, Citizens filed a request seeking approval of a 63 percent rate hike that would take effect Jan. 1, 2023.

“We really view them as a ceiling, right?” Caudill said. “I mean, the system will rise to whatever they are. And so, we bring them up 63 percent, well, I suspect that other rates will also increase.”

Realtors fear for their clients, saying home values will tank when buyers are pushed out of the market. That’s why they’re asking for Donelon to wait 18 months before making a decision on the rate hike.

“God willing, we’re gonna get through this next hurricane season, right? We’re only one year past Ida. And so 18 months should get us past the next one,” Caudill said.

Donelon responded in a statement saying that he is painfully aware of the burden that such a rate increase would have on those policyholders unable to get insurance coverage from the private sector. However, he is constrained by the law applicable to Citizens’ rate structure to approve this rate increase if it is actuarially justified.

“We’re just simply saying, let’s just wait,” Caudill said. “Let’s just wait and see and get through. Maybe the best news that we have is a couple of new agencies are returning to New Orleans after the storm season. And, you know, we got to wait for others.”

Donelon said he has joined with state Sen. Kirk Talbot and Rep. Mike Huval, the respective chairmen of the Louisiana Senate and House Insurance Committees, in seeking funding to replicate the successful post-Katrina and Rita incentive programs that used state money to lure insurance companies back to Louisiana.

Not all insurers are in line with Keller-Williams New Orleans, like the association that works closely with most realtors in the state.

“The Louisiana REALTORS® Association and its related local associations have not taken a position on the proposed increases to premiums under Louisiana Citizens.  The association understands the importance of the continued coverage by Citizens and will continue to work with the state to address the insurance crisis in Louisiana,” Norman Morris, CEO, Louisiana REALTORS® Association said in response to the insurance climate.

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