Max Dorfman, Analysis Author, Triple-I
Damage from extreme hurricanes in recent times has resulted in major losses for Louisiana household insurers and the insolvency of eight insurers.
Louisiana household insurers had a mixed ratio of 461.9 in 2021. The mixed ratio represents the distinction between claims and bills paid and premiums collected by insurers. A mixed ratio below 100 represents underwriting income, and a ratio above 100 represents a loss.
With premiums earned of nearly $2 billion, the mixed ratio of 461.9 means the company suffered an underwriting loss of $7.2 billion in 2021. As Dale Porfilio, chief coverage officer, puts it Triple-I insurance, “it will take 24 years to reach a mixed ratio of 85”. for homeowners insurance policyholders in Louisiana to regain constructive profitability.
In 2020, hurricanes Delta, Laura, and Zeta all caused major injuries, resulting in numerous insurance claims. As of September 30, 2021, there have been 323,727 insurance claims of all kinds for these storms. Insurers have paid or reserved $9.1 billion for Laura alone. Additionally, Hurricane Ida, which occurred in 2021, generated 460,709 insurance claims of all kinds through June 30, 2022, with insurers having paid or reserved $13.1 billion for this storm.
Eight Louisiana homeowner insurers have already filed for bankruptcy, and as many as 12 companies have submitted takedown notices to the Louisiana Division of Insurance, a preliminary step intended to exit the state. That’s prompted tens of hundreds of homeowners to rely on the state’s insurer of last resort, Louisiana Residents Property Insurance Cover Corp.
The market is struggling a lot as Louisiana Insurance Commissioner Jim Donelon has called the current situation a “disaster.”
In response, the Louisiana Insurance Insurance Affiliation (LIGA) began to restructure its claims management for policyholders of bankrupt insurers using the property appraisal expertise of Verisk, a global knowledge analytics provider.
“Transparent coordination with impartial settlement companies has become essential as we work to help hurricane victims across Louisiana rebuild their properties and get back to normal,” said John Wells, CEO of the LIGA.
Additional work to be done
A 2020 Triple-I Client Survey found that 27% of homeowners said they would benefit from flood insurance, meaning an excessive record. Nevertheless, this figure is higher than the National Flood Insurance Program (NFIP) estimates. As the Triple-I notes, homeowners may not understand what flood protection is and how it works – in particular, that flood damage should not be covered by common homeowners insurance policies. households and tenants. Flood protection is marketed as separate coverage from the National Flood Insurance Program (NFIP), administered by the Federal Emergency Administration Company (FEMA) and many personal insurers.
As storms continue to cause significant damage in weak areas, household and flood insurance coverage is needed more than ever. However, threat switching alone should not be enough.
“The Threat Switch is just one tool in the resiliency toolkit,” says Sean Kevelighan, CEO of Triple-I. “Our understanding of loss trends and our experience in assessing and quantifying threats must be joined with expertise, public coverage, finance and science. We must support communities and businesses every step of the way. to herald a broad resilience mindset focused on preventive mitigation and rapid restoration.