Insurance incentives fortify against disasters

Key Takeaways

I learned throughout my 20-plus year journey in the insurance industry that it takes everyone to be part of the solution, whether you are a consumer, insurance company, claims adjuster or agent. 

The challenges we face today provide a unique opportunity to build a more stable and predictable insurance environment. My priority is to make our state a more desirable destination for insurance companies to do business while protecting consumers. 

The best way to address Louisiana’s property insurance crisis — or any regulatory challenge — is to identify the issues, bring the right people together and create solutions that directly address the problems.

Louisiana is no stranger to natural disasters. Hurricanes have played a big part, but we’ve also experienced wildfires, tornadoes, flooding and even the occasional snowstorm. Following a string of devasting hurricanes in 2020 and 2021, a dozen insurers that wrote policies in Louisiana went insolvent. Insurance is increasingly unavailable and unaffordable in Louisiana because we have struggled to compete for the investment dollars of insurers and reinsurers. 

Though hurricane exposure will always be a factor insurance companies consider when determining where to write policies, we can create an environment that increases the affordability and availability of insurance by enacting reforms that stimulate our market. We can do this while protecting insurance consumers by holding the industry accountable to our laws and regulations. That’s been my focus since taking office.

I was recently appointed to co-vice chair of the National Association of Insurance Commissioners’ International Insurance Relations Committee and was selected as vice chairman of the Surplus Lines Task Force. I am also serving on the Government Relations Leadership Council and Reinsurance Task Force. We have been working together across state lines to address the evolving challenges in the insurance market. 

Every state shares a mission to protect consumers and ensure fair, competitive and healthy insurance markets across the country. Through task forces, working groups and special committees, we share best practices, analyze trends and coordinate our responses to emerging risks.

In fact, our Louisiana Fortify Homes Program (LFHP) is modeled on Alabama’s Strengthen Alabama Homes program. It offers grants of up to $10,000 for homeowners to upgrade their roofs to standards set by the Insurance Institute for Business and Home Safety, helping Louisiana homeowners strengthen their roofs to better withstand hurricane-force winds.

There are over 50,000 FORTIFIED homes there, and four out of every five are built outside the grant program. With over 2,430 FORTIFIED roof grants issued since the program began in 2023, the LFHP is making Louisiana a more attractive place for insurers to do business and encouraging other homeowners to fortify their homes without a grant. The number of homes FORTIFIED without a grant grew tremendously in 2024, nearly quadrupling to over 6,652 today from 878 on Jan. 1.

The Louisiana Department of Insurance is leading the effort to move toward that level of adoption in Louisiana, whether through the grant program, self-funding, increasing building codes or adding the new FORTIFIED endorsement to more homeowners policies. 

Legislative support and public interest in the LFHP have been strong. So far, the legislature has allocated $45 million for the program.

The lottery system is new, and so is the focus on the Coastal Zone. In discussions with the team behind Alabama’s program and with reinsurers, we learned that concentrating fortification in specific areas may have a more substantial impact on attracting insurers than the program otherwise could. 

The federal government needs to look at what Louisiana and other states are doing when it comes to prioritizing funding and resources for individuals and state and local governments that are building resiliently. When homes and infrastructure are built resiliently or upgraded to withstand disasters, it protects property and keeps insurance rates stable and affordable.   

It would be helpful for Congress to incentivize those efforts through federal tax incentives and funding for mitigation projects.