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Louisiana’s insurance market is in crisis. New head says less regulation is the answer

Tim Temple, Louisiana's next insurance commissioner, stands in front of the state's Capitol building in Baton Rouge.
Tim Temple Campaign
Tim Temple, Louisiana's next insurance commissioner, stands in front of the state's Capitol building in Baton Rouge.

Change is coming to the Louisiana Department of Insurance as the state grapples with a deepening homeowners insurance crisis in the wake of fierce and frequent storms.

Insurance companies are leaving, consumers’ premiums are growing, more homeowners have been relegated to the state's insurer of last resort and climate change has fueled storms that reliably pummel the state’s coastline and interior.

Louisiana’s longtime insurance commissioner, Republican Jim Donelon, has held the position since just after Hurricane Katrina, and is not running for reelection.

Republican Tim Temple, a former insurance executive, is set to succeed Donelon this January after his only opponent, Democrat Rich Weaver, dropped out of the race in August. His name will not appear on the ballot, according to a spokesperson at the Secretary of State’s office, and he will automatically assume office next year.

“I am enthused,” Temple said in an interview with WWNO and WRKF last week. “I’m very optimistic.”

Temple’s automatic election as the state’s next top insurance official is the second statewide position to be decided before the election. Mike Strain, a Republican from St. Tammany Parish, will be the state’s agriculture and forestry commissioner for a fifth term after no one challenged him. Strain has held the position for nearly 16 years.

Temple, a former insurance executive, has repeatedly said the insurance industry in Louisiana is overregulated and deters companies from doing business in the state. He believes a business-friendly regulatory environment is key to improving the state’s ongoing insurance crisis.

About a dozen home insurers have pulled out of Louisiana since hurricanes Laura, Delta and Zeta in 2020 and Ida in 2021.

About 100,000 homeowners now have policies through the Louisiana Citizens Property Insurance Corporation — the state’s insurer of last resort, meant to fill in the gap left by private insurers’ departures. By law, Citizens’ policies must be priced at least 10% above the highest market insurance rate in each parish. The number of homeowners holding policies with the company has nearly tripled since Hurricane Laura hit in 2020.

Hurricane Ida brought a tree down on Kevin Benoit's family home in Hahnville, La.
Kevin Benoit
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Kevin Benoit
Hurricane Ida brought a tree down on Kevin Benoit's family home in Hahnville, La.

On average, homeowners in Louisiana pay about $2,000 every year for insurance — roughly $700 more than the national average. In 2022, the average homeowners insurance rate in Louisiana increased by 18.5% over the previous year.

Temple said he believes that Louisiana regulates its insurance industry too heavily, and that easing regulation will be key to luring more providers to the state, increasing competition and prompting lower prices for consumers. He said he plans to roll back some of the regulatory actions set by his predecessor, including a rule that restricts insurance companies to seeking rate changes once each year. Temple wants companies to be able to change their rates whenever they want — and says he plans to do away with the once-a-year rate restrictions on his first day in office.

“You allow [the] free market to work. And that means companies change their rates when market conditions dictate, and they’re actuarially sound,” Temple said, adding that companies don’t change rates without a reason, but to remain financially solvent.

Temple also opposes Louisiana’s three-year rule — a state law that, in most cases, prevents home insurers from dropping consumers who have held policies with them for at least three years. Louisiana is the only state with this type of law.

“I’ve heard from insurance companies that say that is their biggest barrier to wanting to come to Louisiana,” Temple said.

Donelon, the state’s current insurance commissioner, has defended the three-year rule as a necessary piece of consumer protection that prevents providers from dropping residents in the wake of inevitable severe weather.

“I understand their desire for that kind of freedom,” he said about insurance companies’ distaste for the rule. “But we’re in a state that is four times more often hit by hurricanes over the last hundred years than Texas or Florida.”

Temple said the three-year rule actually hurts consumers in the long run because it drives companies away, resulting in less competition and higher rates.

But Andreanecia Morris, executive director of housing advocacy group HousingNOLA, points out there’s another way for officials to address the state’s insurance crisis — investing in communities and people.

“We can’t start with the insurance companies,” Morris said. “We have to mitigate the risk for communities so that they can thrive. And then the insurance companies will see that these are communities that they can take this risk on.”

Morris said she’s a fan of the concept behind the Louisiana Fortify Homes Program — a state-funded initiative that will provide homeowners up to $10,000 to replace or strengthen their roofs. But she said the funding isn’t enough to address the needs of the state’s most vulnerable residents, who don’t have the ability to cover the remaining cost.

Temple also supports the Fortify Homes program and said it should continue to be funded. But he said he’s not in favor of the state paying 100% of the cost for Louisianans to strengthen their homes against storm damage. He added that he’ll have a better idea about how to expand and improve the program once it’s underway. Enrollment is expected to start this October.

Additionally, Temple said he’s pushing for a special legislative session in early 2024 to address the insurance crisis. He said he’s already working to create a package of bills to help lure more providers to the state before next year’s hurricane season.

He’s talked to several gubernatorial candidates and lawmakers about holding a special session, he said, and has discussed solutions with insurance companies as well.

“We have already indicated to the marketplace that Louisiana is going to be regulated differently going forward,” Temple said. “I’ve already had conversations with various insurance companies. They’re excited about the opportunity to see change that’s going to happen.”

If Temple implements the changes he supports, Louisiana’s insurance market could be significantly different from its time under Donelon, who also advocates for a free market but prefers what he calls “more balanced regulation” that also protects consumers — including things like Louisiana’s three-year rule.

Despite the fact he is an unopposed candidate, Temple believes he can convince Louisianans he’s the right — not just the only — person for the job.

And although past legislation that was viewed as insurer-friendly for car insurance companies did not lead to a drop in rates, Temple remains firm in his belief that lowering regulations for home insurance companies will result in lower rates for homeowners.

“I think we’re going to see that occur — sooner than I think some people think,” he said. “The proof is going to be in the pudding on how quickly those companies can come into Louisiana.”

Temple will be transitioning into his position as insurance commissioner in the coming months before he officially starts in January.

Molly Ryan is a political reporter and covers state politics from the Louisiana Capitol.