Louisiana residents with this coverage may soon be paying more for their coverage later in 2016.
Residents of Louisiana who purchase the homeowners insurance of last resort in the state may soon find that their rates are going to be higher than they had been last year, if Citizens gains approval for an increase request that they have submitted.
The increases wouldn’t go into effect until later this year, but property owners should prepare themselves.
Should the homeowners insurance rate increases be approved, it will be residents of Terrebonne and Lafourche parishes that will be mainly affected. In Terrebonne, increases could reach 9.2 percent if the current requests are approved for Louisiana Citizens Property Insurance Corp. to proceed as it hopes. On the other hand, in Lafourche, the rate would increase by up to 5.2 percent. In Terrebonne, this would place an additional $311 on the average premium paid by residents, which is $3,393. In Lafourche, that increase would be $170 on top of the current average $3,292.
Currently, over 8,000 properties in those parishes have homeowners insurance coverage through Citizens.
In Terrebonne, there are 4,445 properties with home insurance through Citizens and in Lafourche, there are 3,601 properties covered by the company, according to one of its actuaries, Derek Haney.
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Last week, the property insurance company’s board voted to make a submission of the new, higher rates to the Louisiana Insurance Department in order to receive the required approval. Should they receive that approval, it will mean that the rate increases will become effective on June 30, 2016. Haney explained that these increases are actually moderate compared to some that have been implemented over the last few years. He stated that “Our rates are often driven by what the market is doing.”
Among the reasons that the increases haven’t been higher is the fact that the cost of reinsurance has stayed down. This, according to the chief financial officer at Citizens, Steve Cottrell. He pointed out that if that factor were removed, then the homeowners insurance rates “would be flat.” The cost of reinsurance for Citizens is predicted to drop this year by between 3 percent and 5 percent.