Bankrupt insurance companies leave Louisiana families scrambling ahead of hurricane season
Hurricane season is approaching, but some people in Louisiana are still battling their insurance companies for payouts after last season.
Four named hurricanes in two years — and one deadly tornado — have strained Louisiana’s insurance market.
“We are under pressure for insolvencies, several companies are failing and others are pulling out of our market following their losses,” said Louisiana Insurance Commissioner Jim Donelon.
Four businesses have gone bankrupt since Hurricane Ida hit the state last August, leaving many families without money to repair their homes.
More than 60,000 owners were also forced to find new cover. The Ficaros are one of them.
“The mold was just up and down, especially the kids’ room took on a lot of water,” mum Nicole Ficaro said. “We had to throw away a lot of toys, books and clothes.”
It’s been more than eight months since Ida showed up roaring – and the Ficaros’ house is still without walls. They were waiting for an insurance check before their insurer went bankrupt. In the meantime, they paid for an apartment in addition to a mortgage.
“You just assume you’re paying for insurance all this time and you think they’re going to take care of you,” Nicole Ficaro said. “You never expect them to just leave.”
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In Louisiana, when businesses fail, if the state cannot find another insurer to take on claims, they will pay policyholders through the Louisiana Insurance Guaranty Fund, its safety net for failed businesses.
“These people will see, I believe, better service and faster payments because the Guarantee Fund has the money they need,” Donelon said. “Compared to failing companies that ran out of money.”
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Ficaro said she hopes to see a check soon: “I just want to take my kids home so they can do what kids are supposed to do and we can be home as a family.”
She also said it was scary not knowing if her family will have insurance when hurricane season begins again.
The state has offered homeowners insurance that is not approved for coverage by other companies. However, it is considered a “market of last resort” because it is the most expensive insurance in the state. After Hurricane Katrina, the state sponsored 173,000 policies.
“We know it’s going to grow again as people struggle to get coverage in coastal areas,” Donelon said. “We have seen an exodus of major flag carriers from the Gulf States.”
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Donelon is optimistic that many insurance companies will return to the state after a few mild years.
Colorado State University, however, predicts this upcoming hurricane season will be another above-average year with 19 named storms.