Will Florida Hurricanes Cause Louisiana Insurance Rates to Rise?

As of the 0100 CDT Intermediate update from the National Hurricane Center the center of circulation of Category 5 Hurricane Milton was located due south of the city of New Orleans in Louisiana. That puts the dangerous storm about 500 miles south of the Big Easy. Fortunately for those of us in cities like Lafayette, Lake Charles, Houma, Thibodaux, and Grand Isle, this major weathermaker will not pose too much of a threat to us.

The story is quite different for residents along Florida's western coast. The area in and around Tampa Bay is being mentioned as the most likely place where Milton's fury will cross the coast. That landfall from the hurricane is expected to happen late in the afternoon or early evening hours of Wednesday.

Forecasters with the National Hurricane Center believe the storm will weaken before it makes landfall but should still impact western Florida as a Category 3 storm on the Saffir-Simpson scale. The storm will likely create a tornado threat for much of the Florida Peninsula on Wednesday into Thursday.

The damage from Milton is expected to be catastrophic in many places along the beach. Inland houses and businesses will likely be damaged by wind, water, and flying debris. That will mean claims against insurance policies. Since many companies who do business in Florida also do business in Louisiana will this mean a ricochet effect for insurance rates as those insurers attempt to cover costs paid out on policies?

At first blush, the answer for insurance industry experts is good news for Louisiana policyholders. There should be only minimal impacts on Louisiana rates because of Hurricane Mitchell and last month's Hurricane Helene. The only increase might come as insurance companies seek to protect themselves through reinsurance.

That's where insurance companies pay to insure themselves over the potential payout of their policyholders. It sounds a lot like "cookin' the books" but it is an accepted practice and if doesn't mean you or I have to pay out more for our homeowners' policy I think we're all in on it.

There could be an overall increase in policy rates nationwide because of the active storm season. Should that happen it would most likely be a function of higher rates in the reinsurance market. And you better believe the insurance agencies will pass those increases right to your bottom line.

In the meantime, if you haven't secured flood insurance for your property or if you haven't had your roof inspected, you might want to get that done. Having flood insurance no matter where you live in Louisiana is always a great idea. Having your roof fortified or replaced can also put you "money ahead" on your insurance too.

Meanwhile, let's pray for Florida and all of those who are still hurting from the most recent storms. I think in Louisiana we all know that one day, that's going to be us in the bullseye. So we offer good thoughts for the safety of everyone in the Gulf South.