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    Home»Insurance»Proposed Louisiana real estate market fixes palliative given underlying reinsurance issues – InsuranceNewsNet
    Insurance

    Proposed Louisiana real estate market fixes palliative given underlying reinsurance issues – InsuranceNewsNet

    January 27, 20233 Mins Read
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    OLDWICK, NJ–(BUSINESS WIRE)–
    AM Best believes that Louisiana’s plan to appropriate $45 million funds to incentivize insurance companies to take on more property risk and reduce the burden on the public insurer of last resort is likely to be a short-term palliative rather than an effective long-term solution given the ongoing reinsurance issues.

    Before a special legislative session in Louisiana to deal with the property insurance crisis, a new Comment by Best examines current government property insurance market challenges that impact the availability and affordability of homeowners and commercial property coverage. According to the commentary, “Louisiana’s proposed real estate market sets a palliative given underlying reinsurance issues,” the $45 million should be assigned to Securing the Louisiana Incentive Fund may provide a short-term benefit. However, accelerating reinsurance rates and declining reinsurance capacity, along with capital shortfalls and inadequate coverage, have resulted in unaffordable prices for consumers and created availability issues. Therefore, Louisiana Citizens Property Insurance Societythe state’s insurer of last resort, has experienced dangerous growth – policies have increased by more than 200% January 2021 to August 2022.

    “While the Louisiana incentive program is a step in the right direction, it does not solve the reinsurance problem, because companies that choose to participate in this program may also be dependent on reinsurance, and the ability to reinsurance in high-risk areas has been limited due to increased activity related to natural disasters and outsized losses in recent years,” said David Blades, Associate Director, Industry Research and Analysis, AM Best. As noted in the commentary, if Louisiana citizens can depopulate their policies, they can reduce their reinsurance burden; its reinsurance is to be renewed on June 1, 2023.

    The comment also indicates that the market problems in Louisiana differ from those of Florida, which passed reform measures last year to stabilize its troubled property insurance market. Availability of insurance in Florida has become limited in large part by the unwillingness of insurers to write to the state due to its legal environment, whereas in Louisianaaffordability issues are due to poor results over the past two years due to hurricanes, other weather events and rising reinsurance costs.

    To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=XXXXXX.

    A video discussion of this comment is also available at http://www.ambest.com/v.asp?v=amblouisiana123.

    AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at United Statesthe company does business in more than 100 countries with regional offices in London, amsterdam, dubai, hong kong, Singapore and Mexico City. For more information, visit www.ambest.com.

    Copyright © 2023 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

    src=”https://cts.businesswire.com/ct/CT?id=bwnewssty=20230127005436r1sid=acqr8distro=nxlang=en” style=”width:0;height:0″ />

    Show source version on businesswire.com: https://www.businesswire.com/news/home/20230127005436/en/

    David Blades
    Associate Director,

    Industry research and analytical

    +1 908 439 2200 ext. 5422

    [email protected]ambest.com

    Christopher Sharkey
    Manager, Public Relations

    +1 908 439 2200 ext. 5159

    [email protected]

    Christopher Graham
    Senior Industry Analyst,

    Industry research and analytical

    +1 908 439 2200 ext. 5743

    [email protected]

    Al Slavin
    Senior Public Relations Specialist

    +1 908 439 2200 ext. 5098

    [email protected]

    Source: AM Best

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