Bayou Perspective: Louisiana and Florida--Night and Day on Property Insurance

[Louisiana1976]

All this week, Florida’s largest newspaper, the Miami Herald, has been writing both feature articles and editorials about the problems facing Florida property owners in finding affordable insurance. Day after day, headlines conveyed the intensity of the struggle: “Storm Warning: Prop up insurance,” was a typical lead, along with “Is Citizens Insurance ready for the big one?” and “Lawmakers still scrambling on wind insurance.” Florida, like all gulf coast states, has problems of both insurance affordability and availability. But here’s the difference between the Sunshine state and the Bayou state. Florida is giving the problem serious attention. It’s a front and center concern for the governor, the legislature, insurance regulators, and the news media. In Louisiana, there is hardly a whisper.
When Florida Governor Charlie Crist took office a few months before Governor Bobby Jindal in 2007, his first words of commitment were: “The lack of available and affordable property insurance is the biggest threat to our economy. We cannot wait until the regular legislative session to find solutions.” Crisp immediately called a special session of the legislature and offered a litany of changes and reforms that led to cheaper insurance rates.”

Florida has significantly more hurricane exposure than does Louisiana. Ninety percent of all homeowners live within a few miles of the Gulf or the Atlantic Ocean. A hurricane crossing the Florida peninsula slows down, at best, only 15 miles per hour. Yet in spite of all this exposure, property insurance rates are cheaper in Florida than in Louisiana. In Perdido Key, on the Florida-Alabama border, many Louisianans have beach homes or condos. On average, they pay significantly less on these properties than they do on their homes in New Orleans, Baton Rouge and other Louisiana cities. Property insurance rates for commercial real estate have gone down, somewhere in the neighborhood of 30% to 40%, according realtor Steve Ekovich of the Tampa office of Marcus & Millichap, and insurance is more available.

Look at the figures released by the National Association of Insurance Commissioners. In Louisiana, for every $100 of residential property insurance, the homeowner paid, on average, $1.006. In Florida, a similar homeowner paid only 69.3 cents. Louisiana has, hands down, the most expensive property insurance rates in the entire U.S. Yet Florida has much more exposure. Why?

Simply put, Florida officials, from the Governor on down, have made insurance affordability a front burner issue. In Louisiana, it has been little more than a blip on the radar.

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