EDITORIAL: Progress on insurance
The Times-Picayune
August 17, 2007
Getting insurance coverage is one of the toughest post-Katrina challenges homeowners face, and that difficulty has been a serious hindrance to recovery.
That's why the step State Farm is taking to help its South Louisiana policyholders is encouraging. The company, which has 30 percent of the state's residential insurance market, will once again allow customers here to take policies with them when they move.
State Farm, Allstate and Louisiana Farm Bureau Mutual Insurance Co. -- which together accounted for two-thirds of the homeowner's business in Louisiana -- stopped allowing customers to transfer homeowner policies after Katrina. Thousands of people who relocated were forced to get coverage from Louisiana Citizens Property Insurance Corp.
That contributed to the torrent of new customers that the state-sponsored insurer of last resort has struggled to absorb. Insurance Commissioner Jim Donelon said the decision "really put a hole in our boat."
State Farm isn't putting a big patch on the boat now. The company says it isn't trying to increase its market share in coastal parishes. Only current State Farm policyholders will benefit, and it's not clear how many people are planning to move at this point.
But Mr. Donelon sees the decision as evidence of increased confidence in Louisiana. The state didn't take punitive action against insurers, he said, and it adopted stronger statewide building codes. Ongoing levee work is another factor.
So far, other companies aren't jumping to follow State Farm. But even though it's only one company and only a small step, the change in policy is progress. And perhaps the first sign that the insurance industry is looking ahead.