Damages from hurricanes have pushed insurers to close their doors or hike rates, forcing some residents to move out of state.
-- A little over a year ago, Peter Gardner, a Louisiana developer, completed rehabbing an apartment building with 144 units and got a surprise so ugly it made him decide to move his business out of town.When the project began, his broker estimated the annual cost of insuring it would be $75,000. But by the time Gardner finished it, the insurance cost had risen to $175,000. He paid it, but when he went to renew the policy this past July, he got another shock. The broker now said it was $275,000.
Louisiana is not alone in suffering from insurance woes. Rates are going up across the nation, particularly in states like Florida and California, which have been hit hard by climate-exacerbated natural disasters. Florida has a seen a tripling of rates and some of the super rich are complaining of annual premiums topping $600,000. But Louisiana has one of the lowest average incomes in the nation and so the rising costs there are quicker to cut to the bone.
There have long been endemic issues such as crime, pollution and economic stagnation in the state, said Keenan, but now unaffordable insurance is the breaking point. Those closures sent insurance prices spiraling out of control, in both absolute terms and also in prices relative to local median incomes that are among the lowest in the nation. The average premium rose 6.7% in 2021 and then 18.5% in 2022, according to the Louisiana Department of Insurance.But even those averages hide the real pain.
Flood insurance is sold separately from property insurance and it is mandatory for federally backed mortgages in severe flood zones. . For decades, the feds had subsidized the program, but lost roughly $1.4 billion annually. So in 2021, it rolled out a new premium pricing policy, under which homes at most risk could see increases of up to 18% a year up to a maximum of $12,000.
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