Grantee uncovers questionable practices behind failure of Louisiana’s home insurance market; policymakers vow reform

The Baton Rouge Advocate and the Times Picayune, with support from the Fund, found that Louisiana’s home insurance market fell apart in recent years because the state moved insurance policies to small, regional companies with risky business models. Eleven of 12 home insurance companies that failed had sent hundreds of millions of dollars in premiums to affiliates, which are subject to less regulation. The practice makes it difficult to know whether companies are spending money wisely — or siphoning profits, leaving the insurer ill-prepared for hurricanes. The investigative team analyzed how much money each company sent to its affiliates and compared that to the performance of the insurers themselves. They found that the companies sent a significant share of the premium dollars to affiliates, while the insurers posted losses. Many Louisiana residents have been unable to get claims paid by the Louisiana Insurance Guaranty Association – the taxpayer-funded nonprofit that takes on outstanding claims from failed insurers. In 2020, the agency received about 400 claims; over the last three years, it received 41,704 claims linked to failed insurers. The state’s former insurance commissioner acknowledged the problems and said he would support legislation increasing transparency. The current commissioner said he planned to beef up oversight, and the legislature is expected to take up several bills to regulate property insurance.