It’s disheartening to hear that Louisiana still struggles with high insurance costs, particularly for auto and homeowners insurance. The fact that these expenses consume nearly 3% of the median household income underscores the significant financial burden many residents face.
LOUISIANA STILL LEAST AFFORDABLE STATE FOR PERSONAL AUTO, HOMEOWNERS INSURANCE
Finding ways to address this issue, whether through regulatory measures, industry reforms, or other means, could help alleviate some of the strain on Louisiana’s residents.
Louisianans also pay significantly more for homeowners coverage compared to the national average, with an average annual expenditure of $1,965. These are among the highest rates in the country, representing 3.84 percent of the median household income in the state – 55 percent above the national average.
“The state has faced multiple major weather events, with extensive litigation following each natural disaster,” the report finds. “Rising auto-repair and construction costs, as well as the state’s relatively low household income, have compounded these issues.”
Personal auto cost drivers include:
The number of property damage liability claims per 100 insured vehicles in Louisiana is 16 percent higher than the countrywide average.
Injury claim relative frequency: Louisianians show a greater propensity to file injury claims once an accide_t has occurred, with a relative claim frequency almost twice the national average.
Medical utilization: Louisiana auto claimants are more likely than those in other states to receive diagnostic procedures, such as magnetic resonance imaging (MRI).
Attorney involvement: Louisiana claimants are more likely than those in other states to hire attorneys. Attorney involvement has been associated with higher claim costs and longer settlement times.
Claim litigation: The rate of litigation in personal auto claims in Louisiana is more than twice the national average. This rate is the second-highest in the country, surpassed only by Florida.
Homeowners cost drivers include:
Claim frequency, catastrophe claims: The number of catastrophe claims paid for every 100 homes insured for the entire year in Louisiana is almost six times higher than the national average.
Claim severity, catastrophe claims: In the hurricane-prone region, Louisianians are second only to Floridians in the amount paid for the average homeowners insurance claim. Louisiana is 12 percent higher than the national average.
Natural-hazard risk, weather: Louisiana’s exposure to building damage from weather hazards is second only to Florida’s and is dramatically higher than other states.
Claim litigation: Claims in Louisiana were 12 times more likely to involve litigation, compared with states other than Florida.
The challenges facing Louisiana’s insurance market, particularly in the realm of property insurance, are indeed concerning. The departure of key insurance providers, coupled with the insolvency of several carriers, has created significant coverage gaps and financial strain for both individuals and businesses in the state.
The reliance on the state-run insurer, Louisiana Citizens Property Insurance Corporation, as a last resort option highlights the severity of the situation. While it provides a safety net, its high costs render it unaffordable for many residents, particularly those who are most vulnerable.
The ripple effects of these insurance challenges extend beyond just financial burdens. The population decline in Louisiana, as people seek more affordable options elsewhere, reflects the broader socio-economic impact of the situation.
