Farmers to Double Coastal Rates in La., Lower Premiums in the North
Louisiana regulators on Oct. 18 approved rate increases for Farmers Insurance Exchange, ensuring that prices for the company’s homeowner policies across coastal Louisiana will nearly double early next year.
The Farmers rate hike was the latest in a string of 2006 increases for south Louisiana policyholders, as companies try to recoup billion-dollar losses stemming from hurricanes Katrina and Rita. Farmers officials said the increases are necessary because the company lost $112 million in Louisiana due to storm-related payouts.
So far this year, insurance companies have been granted 46 rate increases in Louisiana, averaging 13 percent statewide, according to the Department of Insurance. Rates held steady in 2005.
The Farmers increase, approved by the state Insurance Rating Commission, will mean hikes of 90 percent or more for policyholders in every coastal Louisiana parish. Inland homeowners also will pay more, ranging from 51 percent to 85 percent, in Calcasieu, Lafayette, St. Martin, St. Tammany and other parishes.
The increases go into effect in January.
In parishes north of Alexandria, Farmers will drop rates by 20 percent or more.
Farmers is the eighth largest homeowners insurance company in the state, with 28,000 policyholders and just under 3 percent of the market. The company continues to write homeowner policies in Louisiana, but no longer writes new policies for homes within 30 miles of the Gulf of Mexico, said Rakesha Mishra, vice president for product management.
Rate increases of more than 10 percent require approval from the Insurance Rating Commission, whose members are appointed by the governor.
Commissioners Christine Berry, Barry Busada, Jabari Ragas and Joe Godchaux Jr. voted in favor of Farmers’ rate changes. Steven Ruiz voted against.
The commission also approved a rate increase, averaging 18.5 percent statewide, for a subsidiary of the Chubb Group whose clients own homes worth $750,000 and more. The company, called Federal, has 3,100 policyholders in Louisiana.