Insurance outlook gets brighter for Louisiana

(AP) Two years after hurricanes Katrina and Rita, the insurance market in Louisiana may have hit bottom and could be ready for a rebound as levees are strengthened and the state undertakes regulatory changes, the state’s insurance commissioner and experts say.

“I think we have reached the bottom. I think the bleeding has stopped,” Insurance Commissioner Jim Donelon said.

Experts agree with Donelon’s assessment and say that unless this year’s hurricane season picks up consumers can expect to see new options for homeowners insurance begin to open up, perhaps by next spring.

Katrina caused rates to rise dramatically and made it hard for many people to even get insurance on their homes and businesses.

“With all the business that’s down here, these companies can’t afford to stay out of this market much longer,” said Robert Saak, vice president of the Martin Insurance Agency. “That’s why I really think this year is going to be the make-or-break year for us. It’s just going to take one or two new companies coming in, and it’ll be a domino effect.”

Prices, though, are unlikely to fall anytime soon and rates may settle where they are for the foreseeable future, experts said.

“The risk itself has not diminished, and that’s the ultimate driver of the price,” said Bob Hartwig, an economist and president of the Insurance Information Institute.

State-backed incentives, a toughening of building codes, regulatory changes and favorable court decisions are among a host of factors that have appealed to the industry.

Hartwig said the judicial, regulatory and safety factors have made Louisiana a better place to do business.

“It is far more dangerous for an insurer to operate in a state where the legal and regulatory environment is out of control than the threat of hurricanes,” Hartwig said.

And Louisiana will benefit from what’s happening in other places. In Mississippi litigation and punitive damages have scared the industry and Florida is in the midst of an anti-insurer backlash.

There are signs of an easing in the market already, especially in the lightly regulated commercial property insurance sector.

“There’s starting to be more availability,” said Don Beery, vice president of Eustis Insurance and Benefits.