Henderson talks auto, home insurance at Chamber lunch

Louisiana is making progress toward controlling home insurance premiums, but auto insurance coverage is proving to be a tougher challenge.
That was the word Wednesday from Deputy Insurance Commissioner Ron C. Henderson, a Charenton native who has family in Morgan City, at a St. Mary Chamber Business Luncheon at the Petroleum Club.
Hurricane-prone Louisiana, especially after a series of direct hits by major storms beginning in 2020, is paying home insurance premiums 5% higher than the national average, according to the Bank Rate website. But factor in increases anticipated because of Risk Rating 2.0 and the rising cost of flood insurance, and the situation is worse than the numbers indicate.
And auto premiums for full coverage, generally required for a new car loan, are a third higher in Louisiana than the national average, also according to Bank Rate.
The risk for homeowners isn’t just about premiums. Henderson said the state lost 45 home insurers in recent years. That includes 10 that went out of business and 30 that stopped writing insurance here.
That puts upward pressure on premiums because it reduces competition, Henderson said.
“If you have one loaf of bread on the shelf, what is that going to cost?” Henderson said. “Whatever the heck they want.”
But 10 more companies have decided to write insurance here within the last year. Premiums that were going up by 16-17% in 2023-24 went up only 3-6% last year, Henderson said.
He credited the acquisition of the 10 new insurers to last year’s repeal of the so-called three-year rule. That rule prohibited companies from raising deductibles or canceling policies that had been in effect for three years.
The changed rule allows companies to cancel up to 5% of their customers. But Henderson said companies taking such action are required to file a plan.
“We haven’t seen a plan yet from any company,” Henderson said.
One remaining thorn is Risk Rating 2.0, a relatively new system in which flood insurance risk is assessed based on the characteristics of individual properties, not on larger areas such as ZIP codes.
The word from the Federal Emergency Management Agency is that most homeowners are seeing their premiums stay the same or go down. But 30% are seeing increases, sometimes big increases.
Henderson said his office has been trying to get hold of the formula FEMA uses to assess the risk for individual properties. But FEMA is withholding the formula, citing its proprietary nature, Henderson said.
Henderson’s boss, Insurance Commissioner Tim Temple, has been involved in some high-profile disputes with Gov. Jeff Landry over methods for reducing auto insurance premiums.
Temple has disagreed with Landry proposals such as giving the commissioner the power to reject premium increases seen as excessive. Temple says he already has the power he needs.
They’ve also disagreed over Landry proposals such as capping lawyer fees and limiting damage awards.
But when he opened this year’s legislative session, Landry talked about the need for both trial attorneys and insurance companies to bear some of the pain. And there seems to be agreement on that point.
“It’s not just the lawyers,” Henderson said. “It’s not just the companies. It’s the whole ecosystem.”