'I feel robbed': Single mom from New Orleans says she was forced to sell her dream home over extreme price of insurance. How the state plans to fix 'the worst insurance crisis in its history'
Rochelle Trotter fought hard for her dream home in New Orleans, Louisiana.
The house was more than just four walls and a roof. It was “a safe haven for everybody,” she told WDSU News, and a place where family and friends laughed, talked, danced and made many happy memories.
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That was until Trotter’s home insurance and mortgage payments started seeping the life out of her American dream. After a decade of living on the property, she claims she had to sell the house because she could no longer afford the soaring housing costs.
“I feel robbed because I worked so hard to get my home,” she said. “To have the increase of the insurance just take it away, it’s a lot.”
Sadly, thousands of families in Louisiana are fighting and losing the same battle as Trotter. Tim Temple, the state’s new insurance commissioner, told a legislative committee on Feb. 27: “Louisiana is experiencing the worst insurance crisis in its history.”
Here’s what is causing the state’s insurance crisis — and how lawmakers plan to fix things.
The eye of Louisiana's insurance storm
Louisiana’s geographic location along the Gulf Coast — which is susceptible to catastrophic weather events like hurricanes and tropical storms — presents challenges for both homeowners and insurance companies.
In 2020 and 2021, the Pelican State was battered by a string of devastating hurricanes — including Laura, Delta and Zeta — and several other named storms that caused billions of dollars in insured and uninsured damages.
Temple says the four mammoth hurricanes over a 12 month period triggered an “unprecedented” explosion of 800,000 property insurance claims, which caused 12 insurers operating in the state to go insolvent.
“Those are 12 markets that took consumers’ premium dollars with a business plan that was supposed to pay claims and they didn’t,” Temple told state lawmakers.
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When the number of insurers in a market shrinks, this can have several detrimental impacts on consumers — as Trotter and many other Louisiana residents have discovered in recent years.
Less competition often leads to higher prices for insurance products and services. In addition, when there are fewer options, consumers may struggle to find policies that meet their specific needs — or even get coverage at all.
“I think it’s the deepest, most profound insurance crisis that all of our citizens are facing,” Temple said. “The average citizen in Louisiana spends more of their paycheck buying insurance than other states, so that’s the crisis that we’re facing.”
According to a Bankrate analysis of data from Quadrant Information Services, the average cost of an insurance policy with $250,000 in dwelling coverage for a home in Louisiana is $3,247 annually, which is about 85% higher than the national average of $1,759 per year.
Fixing a broken system
For Trotter, the cost of home insurance grew too high. She was forced to sell her home and move into a mixed-income apartment.
“There’s hundreds … or thousands of people who are experiencing the exact same situation [as Trotter],” John Ford of the state's insurance department told WDSU News. “It’s a really difficult time right now.”
But he also insisted Temple has a plan for how to lure more insurers to the state and for insurers already operating in Louisiana to do more business.
“The more insurance companies we have writing here, the more competition we’ll have [and] the quicker we’ll be able to stabilize rates in the market,” Ford said.
Temple’s plan would involve eliminating a rule that stops insurance companies from dropping customers who have held a policy with them for at least three years. The former insurance exec also suggested a change that would allow insurers to make pricing changes according to the economy and without prior approval. According to WDSU News, critics are concerned Temple’s proposals would hurt customers further by taking away certain consumers rights and granting more flexibility to the insurers. Ford insists the goal is to make Louisiana more attractive to insurers.
Either way, people in the state are hurting right now. As Trotter pointed out: “It’s going to be a sad situation in the state of Louisiana.”
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
