Louisiana 2020 Hurricane Insured Claim Costs Still Rising

Insurers have increased by 25% since the end of last year estimates of the claims costs for three hurricanes that struck Louisiana in 2020, according to the state insurance department.

The Louisiana Department of Insurance reported that insurance companies now expect to pay $9.6 billion on claims of all types from hurricanes Laura, Delta and Zeta in Louisiana, up from $7.7 billion at the end 2020, according to the latest round of information from insurers quantifying paid and reserved losses through March 31.

Policyholders have now filed 311,266 claims of all types from the three storms through the first quarter of 2021. Of those, 192,045 claims, or 62%, were closed with payment as of March 31, garnering $6.9 billion in payments for damage caused by the three hurricanes.

“This data underscores just how devastating the 2020 storm season was in Louisiana,” Insurance Commissioner Jim Donelon said in a media release. “The increase in the reserves backs up what I’ve been counseling policyholders about their claims – it isn’t a one-shot deal. If you find additional damage or increased costs after your original claim, you can file supplemental claims until your repairs are complete, as there is no release applicable to first party claims except under unique circumstances.”

LDI issued a data call last fall requiring all authorized property/casualty insurers, including surplus lines insurers, to submit their claims data on Hurricanes Laura, Delta and Zeta in Louisiana at regular intervals until October 2021. The figures represent insurance claims from both personal and commercial insurance.

The true cost of the three storms is much higher than the amounts reported by insurers. The insurers’ figures do not include claims or payments from the National Flood Insurance Program, which is not regulated by the Louisiana Department of Insurance. They also do not include uninsured losses and what people paid out of pocket to cover the deductibles on their insurance policies.

The 2020 storm season was the most active ever in Louisiana, with three hurricanes plus tropical storms Cristobal and Marco striking the state. The 2020 storm season was also the second most expensive for Louisiana behind the 2005 storm season. Hurricane Laura has now displaced Hurricane Rita in 2005 as the second most costly storm in Louisiana history.

Policyholders have filed 170,956 claims from Hurricane Laura, which struck Southwest Louisiana on August 27 as a Category 4 storm. Calcasieu, Rapides, Beauregard, Ouachita and Vernon parishes had the most claims from the storm.

As of March 31, insurers had closed 83% of the claims from Hurricane Laura, 65% of which were closed with payment. Total paid losses plus reserves on reported claims from all surveyed lines of insurance for Hurricane Laura at the end of March were $8.3 billion, accounting for the vast majority of damage from the record 2020 hurricane season in Louisiana.

Policyholders have filed 85,834 claims from Hurricane Delta, which made landfall in Southwest Louisiana on October 9 as a Category 2 storm. Calcasieu, Lafayette, Acadia, St. Landry and East Baton Rouge parishes filed the most claims from the storm.

At the end of March, insurers had closed 89% of all Delta claims, and 60% of those claims were closed with payment. Insurers have paid or reserved $752.8 million to cover losses from reported claims from all surveyed lines of insurance for Hurricane Delta as of March 31.

Policyholders have filed 54,476 claims from Hurricane Zeta, which made landfall in Terrebonne Parish on October 28 as a strong Category 2 storm. Most of the claims came from Jefferson, Orleans, St. Bernard, St. Tammany and Lafourche parishes.

As of March 31, insurers had closed 88% of reported Zeta claims, and 54% of those claims were closed with payment. Total paid losses plus reserves on reported claims from all surveyed lines of insurance were $566 million for Hurricane Zeta in the most recent report.

Data for the 2020 hurricanes through March 31 can be found at www.ldi.la.gov/datacallresults.

The LDI will continue to collect data from property and casualty insurers to monitor the claims process. The final deadline for data is Oct. 8, 2021.

Source: LDI