NEW ORLEANS (WVUE) – Hurricane Helene made landfall in Florida as a Category 4 storm, just two weeks after Hurricane Francine struck southern Louisiana as a Category 2. Helene is the fourth hurricane to hit the Gulf Coast this season.
While the full extent of Helene’s damage is still being assessed, insurance experts caution that significant storms rarely impact the insurance landscape in isolation.
Dan Burghardt, owner of Dan Burghardt Insurance Agency, explained that Helene’s effects could extend beyond Florida.
“When you look at the whole picture, all of the insurance companies on the Gulf Coast buy reinsurance from the same reinsurance. So whatever happens, which just happened in Florida, may indirectly affect our rates in Louisiana, but it’s going to more affect the rates in Florida first,” Burghardt said.
Insurance companies protect themselves through reinsurance, a system where they purchase insurance for their own policies.
Stephen Lovecchio, a branch owner with TWFG Insurance, offered insight into how hurricanes influence the reinsurance market.
“They deal with insurance on a state-by-state basis, but at the same time, the United States is one big reinsurance market. But Louisiana has a specific market. Florida has a specific market, Alabama, North Carolina,” Lovecchio said.
He agreed that if Helene causes extensive damage in Florida, it could have repercussions for Louisiana’s insurance market.
“Overall, if Florida gets hit really hard with a lot of damages, it will affect us in Louisiana, same as a bad Louisiana storm with a lot of money paid out, will affect everybody along the coast,” Lovecchio explained.
Burghardt emphasized that the severity of the storm, rather than the number of storms, is what drives insurance claims and rate adjustments.
“No, it’s not the number of storms. It’s a category that they hit landfall with. That’s what impacts the claims and impacts the rates,” he said.
Following Hurricanes Laura and Ida in 2020 and 2021, over a dozen insurers in Louisiana went bankrupt, and others stopped writing wind and hail coverage south of Interstate 10 and Interstate 12. In response, Louisiana adopted reforms similar to those in Florida, aiming to attract more insurers to the state.
However, new insurers have yet to flood the market.
“It’s probably going to take a little time, especially when you still have a couple of months left for hurricane season, and they’ve already had two applications for companies pending for January 1,” Burghardt noted.
Lovecchio added, “Now that the reinsurance market is stabilized, the reinsurers want to write with companies and partner with companies that write in Louisiana. So it’s just a matter of time before they start coming in.”
He pointed out that insurers entering the Louisiana market are fully aware of the hurricane risks.
“So, whether you get them in ‘24 or ‘26 or 2027 or the day after you start writing, you know coming in that you are going to be exposed to it. So, when they happen it really doesn’t matter because you have to come in with a plan that you expect to get hit. So that’s really not a big issue for them,” Lovecchio said.
Still, many are hoping that Helene will be the last hurricane to hit the Gulf Coast this year.
“So, it’s scary, it’s stressful. And even if they don’t hit or landfall here, you still got to go out and prepare, spend money on boarding up your houses, you know, emergency supplies, batteries, test your generator,” Burghardt said.
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