The cost of homeowners insurance is weighing heavier on the budgets of Louisiana residents this year as insurers across the state struggle with inflation and the impact of Hurricane Ian in neighboring Florida. In addition, flood insurance policies sold by the federal government are becoming costlier for many homeowners, as are prices for Louisiana Citizens, the state’s insurer of last resort.
Premiums have doubled in some areas and five insurance companies — Maison, Weston, Southern Fidelity, Lighthouse, and Americas — have failed in 2022.  That’s left many homeowners scrambling for coverage, and thousands have opted for coverage from Louisiana Citizens. Policies from the state-backed insurer of last resort already tend to be pricier and more limited in their coverage, but they’re getting even more expensive — the Louisiana Department of Insurance approved a 63% rate increase effective Jan. 1. 
What caused Louisiana’s insurance problems?
Insurance companies buy reinsurance — essentially insurance for insurance companies — to protect against financial risk. The cost of reinsurance has gone up frequently the last few years, thanks to inflation, war in Ukraine, and growing climate risks.  Reinsurance prices are a reflection of risk around the world, says R. Kelley Pace, a professor of finance and director of the Real Estate Research Institute at Louisiana State University. In Louisiana, where one hurricane can do major damage to a homeowners insurance company’s balance sheet, strong financial backing is a must.
Many of Louisiana’s insurance companies also operate in Florida, which was facing its own insurance crisis even before Hurricane Ian struck. Weston and Lighthouse each sold policies in Florida and Maison was owned by FedNat, which also operated in Florida. Ian, which caused more than $5 billion in estimated insured losses, will not improve the situation, Pace says.
But it’s not only home insurance prices that are rising. The Federal Emergency Management Agency has introduced a new method of calculating flood insurance rates that is increasing prices for 80% of Louisiana policyholders.
How to deal with the Louisiana insurance crisis
Louisiana policymakers are attempting to bring more home insurers to the state through the revival of the Insure Louisiana Incentive Program, which offered grants to lure insurance companies back to the state in the mid-2000s after the catastrophic impact of hurricanes Katrina and Rita.  Louisiana Insurance Commissioner Jim Donelon has asked the state legislature to restore funding to the program. 
If you're looking to save money on home insurance, one option could be to raise your deductible, the amount you pay before insurance kicks in, but keep in mind: This increases your financial risk. You can also try to shop around to find a cheaper price. But that might be risky too: If your policy has been in effect for three years in Louisiana, your insurer isn’t allowed to cancel it, with a few exceptions.  If you sign up with a new insurance company, you lose that protection.
“That tends to reduce the incentive to move insurance companies,” Pace says.
Some home insurance companies in Louisiana offer discounts if you mitigate risks to your home. For example, if you outfit your home with features to withstand high winds, you may be eligible for a discount on the wind portion of your policy.
If you have a Louisiana Citizen’s policy and are worried about the 63% rate increase, be aware that it won’t take effect until your policy renews. So if you got the policy on Nov. 1, your premium won’t rise until Oct. 31, 2023. Private insurance companies will likely be a better deal, especially if the state successfully gets more insurance companies to sell policies, so make it a habit to compare home insurance quotes at least once a year.
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