Increased property insurance cost vexes Delcambre aldermen

DELCAMBRE — Skyrocketing insurance premiums are not only hitting Louisiana homeowners hard but also local governments hard.
Delcambre’s elected town representatives struggled with that new reality at Monday’s meeting of the town Board of Aldermen, who sought a way to cut back on the money they’re paying to insure town-owned structures.
Mayor Pam Blakely said at Monday’s meeting that she thought the insurance rates would double from the previous year, only to be shocked when the lowest coverage they could find was three times as much as in 2022, going from around $30,000 to about $90,000.
“This is crazy,” Blakely said. “We can’t pay this.”
John Caro of Brown and Brown Insurance said Delcambre is not alone in facing much higher insurance costs. Other municipalities and parishes he finds coverage for are facing similar, or even greater, difficulties, he said.
“Last year, when we took over your general liability insurance and property and all that, we probably saved the city about 10-15 thousand dollars.
“Property insurance in the entire state of Louisiana right now is ridiculous. This year we renewed our general liability insurance, and our general liability insurance stayed flat. Our property insurance is where we saw the biggest rate increase.”
Caro said he had told Blakely that he expected the rate to double, based on what he saw with other municipalities he provides coverage for in Louisiana. His specialty for his 30 years in the insurance business is municipal governments and school boards, from Natchitoches to Lake Charles and around the state.
“What I can tell you is, right now, in Louisiana, outside of New Orleans, Vermilion and Cameron parishes are next to impossible to get property insurance in right now,” he said. “Calcasieu is a close third.”
It’s been a huge challenge finding insurance companies willing to write property policies in South Louisiana, he said.
Kaplan, Abbeville, and Gueydan are in the same boat, Caro said.
“Vermilion Parish is getting slaughtered,” he said of the increased insurance costs.
Alderman Tipper Esponge asked Caro if he had seen rates tripling everywhere. Caro said was going to speak with the Winn Parish School Board, the city of Winnfield and the village of Hodge, and each of their rates tripled. The St. Martin Parish government’s rate rose at an even higher clip, from $250,000 to $810,000.
Since 2020, Louisiana has been hit with 10 named storms, he said, each of which generated over $1 billion in lawsuits, totaling about $50 billion. In the entire United States, outside of Louisiana, there’s been $55 billion in lawsuits in that same three-year period.”
Caro said he went to 18 insurance carriers looking for quotes for the town, and the $90,000 quote was the best rate. Blakely said that some of the buildings being covered, like an old public works barn that will be torn down, are covered for values well above what it would cost to replace them.
“I understand what you can replace it with, but what it’s built out of right now is what you’re insuring, and that’s what the insurance companies require you to insure it for,” he said. “The insurance companies require you, based on the square footage and what your building’s made out of, they require you to insure it for so many dollars a square foot. Otherwise they won’t insure you at all.”
All the offers for quotes were for more than $100,000, and all wanted the town to increase the values of what buildings are covered for by at least twice what was insured last year, Caro said.
The carrier offering coverage for $90,000 are not requiring those values to increase, he said.
With that increased insurance premiums staring them in the face, the board looked for ways to reduce the costs, settling on dropping some items from coverage, like the town’s emergency building, located behind City Hall, which is built to survive a Category 5 hurricane, and the water tower, which the town’s general liability insurance would cover if it were to fall.
“We’ve got to do something,” Blakely said. “We can’t pay $90,000. We couldn’t afford $30,000.”
Caro was asked if there were any legal implications for the town if it is underinsured. Some towns don’t even have general liability coverage.
“It’s what you can afford,” he said. “Like I tell every buyer, if you can’t afford it and you want to drop it, by all means, do what’s right for the city. Do what you think is right for the city. Otherwise, you’re going to start dipping into your rainy day funds, and with the way property (insurance) is going in Louisiana, it’s going to start going up every year, and every year you’re going to be dipping into your rainy day fund. Eventually, your rainy day fund is going to be gone.”
So the board went through which properties to drop from coverage to reduce the premiums. Esponge estimated the town saved between $30,000 and $40,000 after the changes.