DON’T COUNT ON LOWER INSURANCE RATES IN LOUISIANA!

Monday, October 14^th, 2024

Baton Rouge, Louisiana

 

DON’T COUNT ON LOWER INSURANCE RATES IN LOUISIANA!

 

Louisiana legislators are ringing their hands over the increasing cost of property insurance. “How are we going to bring Insurance premiums down? What to do, what to do?”  Will enforcing stronger building codes work? How about giving grants for people to reinforce their roofs? Will any of this make any difference?  Don’t count on it.

 

Yes it’s true that insurance is regulated on a state-by-state basis. But unfortunately, any state actions will be merely a drop in the bucket.  In recent months alone, there have been two major hurricanes along the gulf coast, and now, can you believe, another in the mountains. Hurricanes Francine, Helene and Milton have taken their toll on reinsurance, not just in the deep south, but the whole rest of the country.

 

Here's how reinsurance works. Any storm of $10 billion or less can generally be handled by U.S. insurance companies operating in each individual state. After all, in many states it’s been a number of years since any hurricane caused significant damage. Look at western North Carolina where I happen to have a home. Most folks cannot remember how far back it was that a weather related disaster took place in the Blue Ridge Mountains. Homeowners often pay premiums year after year, and expect their insurance company to save those premiums for a time with a big storm occasionally hits.

 

Of course that’s why insurance premiums are so much higher in states like Louisiana and Florida. There may be a few years in between a significant hurricanes. But as a whole, those of us living here in the Bayou State just know that in every few years, there is going to be a big storm when you will need significant insurance coverage. Quite frankly, we would be lucky if premiums just stayed on an even keel and not take any significant jump. But that also is not going to happen.

 

When people talk about lowering their property insurance premiums, just look at what has taken place in the past four or five years. The cost of rebuilding or replacing a house has jumped considerably. As much as 25% in many areas. This increase has included in the cost of labor as well as the cost of materials. Much of this increase is related to inflation and the cost of importing building materials worldwide.

 

Many homeowners  are underinsured and do not have sufficient replacement coverage. The American Property Casualty Insurance Association did a study that determined as many as 30% of all insured homes need to increase their insurance coverage because of rising building costs. They just do not have enough insurance in case their home is seriously damaged.

 

When major storms cause more than $10 billion in damages, that’s when an American insurance company needs a reinsurance company. Insurance companies buy insurance just like you and I do. Kind of like the bookie laying off part of his bet. To protect themselves, insurance companies buy a portion of what they might owe from  reinsurance companies, primarily located in Europe. There have been major natural disasters all over the world in recent years, and many of these reinsurance companies have taken huge losses. So they are not about to lower their rates. Hopefully, these current rates will not go up too much.

 

Some legislators are proposing giving grants to strengthen the roofs of homeowners, and others want to enforce the building codes. But there is only enough money for a handful of grants to build new roofs, and building codes will face an uphill fight in the legislature from realtors and contractors. So any such changes might offer help in the future, but really nothing of substance in the short term.

 

I know it’s disappointing and bleak to hear these observations. I’m just pointing out my experience of being  the Louisiana insurance commissioner for 12 years. Let’s face it. We benefit here in the Bayou State from a warmer climate and for many good paying jobs in plants along the Mississippi river.  But we all pay a price for a living near coastal waters in the deep south.  

 

The long-term solution is for Congress to create, as this column has been arguing for years, a national reinsurance backstop similar to the terrorism insurance program, which guarantees that the government will step in and help cover catastrophic losses once they reach a certain dollar amount.

These suggestions will not force insurance rates to take a major drop. But they will stabilize a volatile insurance market that has made the cost of property insurance unaffordable for thousands of Louisiana homeowners.

Peace and Justice

Jim Brown

Jim Brown’s syndicated column appears each week in numerous newspapers throughout the nation and on websites worldwide. You can read all his past columns and see continuing updates at http://www.jimbrownusa.com.

 

 

LOUISIANA CAN RELATE TO DISASTER IN THE MOUNTAINS!

Monday,  October 7^th, 2024

Linville, North Carolina

 

LOUISIANA CAN RELATE TO DISASTER IN THE MOUNTAINS!

 

“Drive Faster. The Mountains are close by”. That’s a bumper sticker I’ve seen on a number of cars throughout western North Carolina. Yes, living in the mountains is special. A lot of people are beach groupies or mountain devotees.  I’d like to think I’m both. 

 

North Carolina has become a second home for us. I graduated from Chapel Hill, home of the University of North Carolina back in 1962. We have had a home in the Blue Ridge Mountains as far back as I can remember. In recent years, we’ve been at our mountain retreat generally from end of May to the end of October. There is nothing prettier than to see the leaves change as the fall season arrives.  It’s like an artist taking a brush and painting each individual leaf a different color. Simply spectacular.

 

And one thing you never had to worry about. Hurricanes. We lived through hurricane alley in Louisiana and concerns about tropical depressions in the Gulf makes us pay close attention. History has taught us well. When the hurricane warnings go out, anyone with a bit of common sense stocks up on supplies, boards up windows and doors, and has a disaster evacuation plan if necessary.

 

Hurricane Katrina was a real learning experience. Don’t count on the government for immediate help. In 2005, both state and federal officials dillydallied for days. Our governor, Kathleen Blanco set on Air Force One with President George Bush, and they argued with each other over who would lead the relief program. Neither could agree, and delays that hampered the recovery effort lasted for several days. Let me tell you how bad it was. My brother-in-law at the time was sheriff of Plaquemines Parish, the lowest part of the state stretching into the Gulf of Mexico. He told me that the Canadian Mounted Police made it to his part of the state before the first federal official arrived.  Simply unconscionable.  We learned some hard lessons about looking out for one another back then.

 

None of those problems affect you when you stay up in the mountains.  Flood insurance?  Who would possibly need it? The occasional heavy rain just rolls down the cliffs and boulders, and into the numerous streams below. Most people carry high deductibles or just bare-bones basic insurance coverage.  Many buy no insurance at all. They roll the dice that nothing damaging is going to happen to their homes, and most of the time they are right.

 

Then the unbelievable, the unthinkable happened. It’s starting to rain. And it rained. And it rained.  This went on for days. Folks in these uplands love to live right by a mountain stream were they can fish and boat ride from their own backyard.  Fly fishing is way of life in the mountains. But those streams began to overflow. And before they knew it, not only with their homes being flooded, but the massive downpours throughout the mountains cause mudslides and huge rocks to come loose and begin plunging down these high cliffs.

 

People that live in most of these mountain areas around western North Carolina only have one road in and out from there mountain retreats. As rainwater kept pouring down and mudslides roared into mountain valleys, roads washed away and there was no way to make a retreat. All the basics shut down. No electricity, no water, no phone service. So many were caught in the crosshairs of gushing water, mudslides and boulders tearing down the mountains. As I write this column, several hundred rural residents are still accounted for.

 

It's too early to judge the federal and state response although criticism has already started. FEMA, the federal agency in charge of disasters, were apparently late in arriving on the scene.  So what’s new? Remember during the Katrina days when George Bush praised then FEMA Director Michael Brown saying: “you’re doing a heck of a  job Brownie.” He was fired a few weeks later for being, with full justification, incompetent. We know all about FEMA here in the Bayou state. They generally have a hard time getting it right.

 

I’m hoping to get up to my Blue Ridge Mountain retreat in the next week. Many of the roads are still impassable, and there’s no utilities of any kind to our home. Here’s what I’ve learned. No place in America is safe from natural disasters. We all need to learn a lesson here and realize the implications of higher insurance rates and protecting our homes.  And none of us are going to be happy about it.

 

Peace and Justice

Jim Brown

Jim Brown’s syndicated column appears each week in numerous newspapers throughout the nation and on websites worldwide. You can read all his past columns and see continuing updates at http://www.jimbrownusa.com.