No Louisianan can be satisfied with the current availability and affordability of homeowners insurance in our state, but the harshest critics of my strategy to reform our market offer no ideas of their own. Instead, we hear that nothing will work or that a proposed change is “anti-consumer” and ultimately they prefer to blame the climate.
Make no mistake about it, the weather is a factor that is causing insurance problems across the country. But while every Gulf Coast state faces the same hurricane environment and every other region of the country has to deal with its own types of severe weather, all have managed to avoid a true, ongoing crisis like the one Louisiana faces.
Since taking office in January, I’ve asked my colleagues in other states why their insurance companies aren’t on fire like ours. I also asked insurers why they don’t do business here.
They all say the same thing: Louisiana is a more complex and expensive place to do business than any other state. Florida was in the same rapidly sinking ship as us, but they undertook a multi-year course correction to repair their market and are already seeing positive results.
The insurance status quo is simply not acceptable to me, and it shouldn’t be to anyone. It has led to the most expensive market in the country. My comprehensive plan to reform the market was developed with input from insurers, reinsurers and, most importantly, insurance consumers, and I am confident it is the best way to create positive change for all Louisianans.
I have read criticism of my decision to refrain from fining some insurers for their claims handling after Ida. As commissioner, I will never hesitate to impose fines when necessary. In fact, I have already issued several fines since taking office, including a $100,000 fine to an auto insurer earlier this year. Ignoring the context in which I make these decisions harms the public and causes unnecessary confusion.
So, let’s talk about context.
While many policyholders had a bad claims experience after Hurricanes Laura, Delta, Zeta and Ida, the devastation caused by those storms cannot be underestimated. Louisiana insurers received 800,000 claims in a 12-month period while dealing with a global pandemic that affected the price and availability of materials. This created a situation as challenging as any the industry has ever faced. He was a major contributor to the bankruptcies of 12 insurers that wrote substantial business throughout southern Louisiana.
My predecessor conducted market conduct reviews and fined five companies following Hurricane Laura. That process involves reviewing a sample of complaints to identify whether there were problems in the overall complaint handling process. Those five fines were reduced or forgiven.
Let’s review what happened to those companies and their policyholders: Two of the companies left the Louisiana market and three companies (including one of the two that exited) failed. Not a single dollar of those fines went to the policyholders. Only one of those five companies still operates in Louisiana.
I believe that working with insurers to improve the claims experience for policyholders is more effective than litigating with them and issuing press releases promoting unproductive fines like those imposed after Laura.
Last year, my predecessor began vetting five companies for Hurricane Ida claims management. While I could impose thousands of dollars in fines on some of the few insurance companies still operating here (just one of the tools at my disposal to protect consumers), the full and preliminary reports in these cases found no evidence of acts intentional actions that result in large fines. Importantly, imposing fines will do nothing to help consumers who received late payments after Ida and certainly will not improve our market.
Instead, I met with insurers to discuss the results of the examinations, identify solutions to any problem areas, and set expectations to improve the handling of future claims based on new laws that more clearly establish the rights and obligations of consumers and insurers. .
The process of repairing our market will require adjustments made with constructive input from those who want to be part of the solution. We didn’t get here overnight, and we’re not going to fix this in one successful homeowner’s insurance reform session. But I am confident that this new regulatory approach has put us all on the path to more choice and affordability in the Louisiana insurance market.
Tim Temple is Louisiana’s insurance commissioner.
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