Bad bet on the bayou?
By working for insurance companies, and not you and me, Jeff Landry and other state leaders are putting Louisiana's future at risk
Baton Rouge Advocate reporter Tyler Bridges published an excellent book in 2001 about the advent of legalized casino gambling in Louisiana. He called it Bad Bet on the Bayou. I’ve been thinking about that title recently in the context of what I fear is an awful, reckless bet that Gov. Jeff Landry, state Insurance Commissioner Tim Temple, and most legislators are making about homeowners’ insurance.
They’re betting that giving the insurance companies carte blanche will not only lower skyrocketing home insurance rates in south Louisiana but also prevent the state’s insurance market from collapsing if and when a strong hurricane hits Louisiana this year or next.
They’re betting that letting insurance companies drop whomever they want will not result in them dropping whomever they want.
They’re betting that allowing insurance companies to charge whatever they want will prevent them from making you pay whatever they want.
They’re betting that making it harder for policyholders to file lawsuits after insurance companies abuse them won’t result in more abusive behavior by insurance companies.
They’re betting that creating a “free market” in which insurance companies are largely unshackled from state regulation will result in lower premiums and better behavior because . . . competition, I guess.
Are these good bets or bad bets? The next major storm — perhaps by this August — may tell us.
Or could the next major storm literally and figuratively blow all these so-called “reforms” out of the water and expose Landry, Temple, and many lawmakers for what they are: insurance industry shills?
That’s because the insurance market could collapse after a big storm hits the wrong place on our coast — New Orleans, Lafayette, or Houma-Thibodaux — and inflicts damage on the scale of Katrina, Rita, or Laura.
When that storm happens — and it eventually will — insurance companies will flee the state en masse. Others will go belly up. Those that remain will refuse to pay claims, and homeowners will find it harder to sue, which, until this legislative session, was one potential recourse if an insurance company abused you.
Louisiana Citizens, the state-backed insurance company of last resort, will assume more of the burden across the state but will charge more for less coverage.
Those who have homes in south Louisiana that weren’t damaged will continue to see their insurance premiums rise — to the point that they cannot afford to live in their houses. But who will they sell their homes to? Who can afford to buy a $300,000 home for which the insurance premiums are three times the mortgage payments?
If you cannot sell your house, it’s essentially worthless.
So, we’re not just talking about a collapse of the home insurance market; we’re also talking about a potential collapse of the real estate market.
And, if you live in Shreveport, Alexandria, Monroe, or Baton Rouge and think you’d be immune from the fallout of these collapses, well, I think that’s a bad bet, too. The shock waves of a collapse of this magnitude will be felt in north Louisiana.
If Landry, Temple, and lawmakers want to make reckless bets, let them have a party at a local casino. Let the insurance lobbyists spot them each a few hundred dollars for a night at the blackjack table.
But every resident of Louisiana should be outraged that these individuals are having a big political party, betting the house — literally, your house — that doing the bidding of the insurance lobbyists is the safest route to securing Louisiana’s future.
I think many reasonable, sober observers have already concluded that’s a very bad bet.
By the way, buy Tyler’s book. It’s a doozy.