Louisiana's Insurance Crisis: Market Challenges and Regulatory Responses
Louisiana is facing significant challenges in the insurance market, marked by rising costs and limited availability, which contribute to residents leaving the state. The state’s Insurance Commissioner, Tim Temple, highlighted the severity of the current insurance crisis, describing it as the worst the state has experienced. Legislative efforts and regulatory changes have been implemented to address these issues, with some positive signs emerging including the return of insurers and increased market capacity. Premium rate increases have slowed, with a statewide average of 1.8% in 2024 compared to double-digit increases in previous years, and some rate decreases have been observed.
Key cost drivers in Louisiana’s insurance market include an unusually high frequency of bodily injury claims and litigation rates far exceeding national averages. Despite a comparable number of licensed drivers, Louisiana experiences nearly twice the number of bodily injury claims compared to states like Alabama. The state legislature is conducting hearings to better understand and address these claim-related cost drivers, focusing on reducing frivolous or excessive claims to bring premiums more in line with neighboring regions.
Property insurance efforts include the FORTIFIED Roof Program, which aims to reduce insurance costs by encouraging stronger, more resilient construction standards. The program has approved nearly 4,600 applications in 2024 and now has a stable funding source of $27-$30 million annually through insurance industry fees and taxes. The program has also seen increased tax incentives for homeowners investing in FORTIFIED roofs, doubling the previous deduction to $10,000. To date, 3,800 FORTIFIED roofs have been installed, providing policyholders with premium discounts.
The Insurance Department's fiscal role is significant, collecting over $1.4 billion in premium taxes annually, split roughly evenly between healthcare and property/casualty lines. Commissioner Temple emphasized the foundational nature of insurance as a financial risk transfer mechanism rather than an investment or maintenance solution. Ongoing legislative oversight and regulatory adjustments aim to stabilize the market and enhance consumer protection while fostering an environment conducive to insurer participation and capacity growth.