Louisiana legislators are ringing their hands over the increasing cost of property insurance. “How are we going to bring Insurance premiums down? What to do, what to do?” Will enforcing stronger building codes work? How about giving grants for people to reinforce their roofs? Will any of this make any difference? Don’t count on it.
Yes it’s true that insurance is regulated on a state-by-state basis. But unfortunately, any state actions will be merely a drop in the bucket. In recent months alone, there have been two major hurricanes along the gulf coast, and now, can you believe, another in the mountains. Hurricanes Francine, Helene and Milton have taken their toll on reinsurance, not just in the deep south, but the whole rest of the country.
Here’s how reinsurance works. Any storm of $10 billion or less can generally be handled by U.S. insurance companies operating in each individual state. After all, in many states it’s been a number of years since any hurricane caused significant damage. Look at western North Carolina where I happen to have a home. Most folks cannot remember how far back it was that a weather related disaster took place in the Blue Ridge Mountains. Homeowners often pay premiums year after year, and expect their insurance company to save those premiums for a time with a big storm occasionally hits.