Not surprisingly, recent hurricanes lead to more insurance complaints
10 insurers have left Louisiana since 2019, 5 more insolvent
Debris outside of Chauvin homes after Hurricane Ida (Photo by Rachel Mipro/Louisiana Illuminator)
Complaints to the Louisiana Department of Insurance (LDI) soared following major hurricanes over the past two years, with homeowners reporting delays with claims leading the way, according to a Louisiana Legislative Auditor’s report released Monday.
State lawmakers requested the audit, which used LDI data, after hurricanes Laura and Delta in 2020 and Ida in 2021 impacted parishes with a combined 4 million residents.
The data show after averaging 440 complaints annually between 2017 and 2019, the Louisiana Department of Insurance fielded 1,356 complaints in 2020 and 5,264 last year after Ida. Insurers have paid out $15.1 billion to cover hurricane damages from the past two years.
“While policyholders are negatively impacted when they are unable to easily obtain the payment of claims owed to them, the payment of large volumes of losses in a short amount of time can also contribute to hardships for policyholders,” the audit report said. “For example, to recover from financial losses, insurers may seek to increase rates, write fewer or no additional policies to homeowners in affected areas, or leave Louisiana’s insurance market altogether either voluntarily or after being unable to pay claims and being placed into receivership.”
According to the audit, Hurricane Laura led to 133,415 residential property claims filed and 1,392 complaints, representing 1% of total claims. Following Hurricane Ida, there were 339,193 residential claims and 4,025 complaints, or 1.2% of total claims.
Nearly 98% of complaints filed with LDI from 2020 and 2021 involved insurance companies, while adjusters and insurance agents each account for less than 2%.
Nearly 64% of the complaints from the past two years led to investigations with outcomes that favored homeowners. Another 28% ended with neutral outcomes that favored neither the homeowner nor the insurer, and 6% were decided in favor of the company that issued the policy.
The audit report said at least 10 property insurers have left the market since 2020, five others have stopped writing new policies and five more were placed into receivership once they became insolvent after paying out hurricane claims. An official from the Department of Insurance told a committee of lawmakers Monday that another company would exit Louisiana soon, resulting in about 15,000 policies moving to the state’s property insurer of last resort.
The Louisiana Insurance Guaranty Association covers claims when insurers default. Policies from at least three of the defunct insurers have been absorbed by other companies so that there was no lapse in coverage, according to the audit report.
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