Weiss Ratings has released a report warning that trends observed in Florida's property insurance sector are increasingly affecting homeowners in Louisiana.
The independent rating agency pointed to three patterns that raise concerns about the financial behavior of insurers operating in both states: high rates of unpaid claims, a gap between underwriting losses and investment gains, and the diversion of funds through affiliate transactions.
The report highlights a rise in the percentage of homeowner insurance claims closed with no payment. Nationally, 41.9% of claims were closed without payment in 2024, up from 25.8% in 2004. In Louisiana, the rate was higher, at 44.6%. Several insurers closed more than half of their homeowner claims without making any payments.
Among large insurers operating in Louisiana, Kin Interinsurance Network, domiciled in Florida, closed 68.3% of claims with no payout in 2024, up from 44.0% in 2023.
Spinnaker Insurance Co. (Illinois) closed 60.6% of claims, Elevate Reciprocal Exchange (Texas) closed 54.9%, and SureChoice Underwriters Reciprocal (Texas) closed 51.3%. Other insurers above the 50% threshold included Allied Trust Insurance Co., Safepoint Insurance Co., and Allstate Vehicle & Property Insurance Co.
Smaller, Louisiana-domiciled insurers reported similar trends. Cajun Underwriters Reciprocal Exchange closed 53.8% of claims without payment, while Gulf States Insurance Company closed 47%.
Florida and Louisiana have both undertaken significant insurance regulatory reforms in recent years to stabilize their respective markets, particularly in the property insurance sector.
In Florida, legislative measures have led to a more stable property insurance market. The Florida Office of Insurance Regulation (OIR) reported that property insurance rate filings for 2024 showed a downward trend for the first time in years, indicating continued stabilization of the market.
Additionally, reinsurance costs for Florida carriers decreased in 2024, further contributing to market stability.
Louisiana, facing challenges from recent hurricanes and a volatile insurance market, implemented reforms aimed at attracting insurers back to the state and reducing premium costs.
In 2024, the Louisiana legislature enacted several insurance reform bills, including measures to expedite claims handling and adjust rate filing processes. These efforts have led to the entry of new homeowners insurance companies into the market and a decline in both costs and the frequency of rate filings.
The Weiss report also examined the disconnect between underwriting performance and overall profitability. Nationally, from 2004 to 2024, insurers posted $23.5 billion in underwriting losses but earned $155 billion from investments and other sources.
In Louisiana, insurers reported $1.6 billion in underwriting losses over the same period but earned $88.3 billion in investment and other income – amounting to $55 in profits for every $1 lost on underwriting.
Weiss Ratings also raised concerns about affiliated transactions. Since 2004, insurers operating nationally paid $86.7 billion to affiliated companies. In Louisiana, those payments totaled $27.1 billion. The report stated that such payments reduce funds available to pay claims and can limit transparency for regulators.
Dr. Martin D. Weiss (pictured), founder of Weiss Ratings, said the volume of claims denied without payment, paired with large investment profits and intercompany transfers, should prompt greater oversight.
"We urge regulators, policymakers, and consumers to scrutinize these practices, demanding greater transparency," he said.
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