The home insurance market is crumbling in New Orleans, leaving Alfredo Herrera with few options for coverage — and skyrocketing insurance premiums.

Herrera, 35, works in finance for a local bank. He bought his 900-square-foot home in New Orleans’ Mid-City neighborhood in 2020 for $270,000, and lives there with his partner.

In 2022, he paid $1,600 a year for home insurance. But last July, his insurer canceled his coverage, saying it was leaving Louisiana.

In the past, acquiring or keeping homeowners’ insurance didn’t present much of a problem.

But as climate change increases the frequency and severity of extreme weather, insurers — especially those in areas most impacted by floods and fires — are raising their premiums, or pulling out altogether, impacting the affordability and availability of home and fire insurance.

  • Cryophilia@lemmy.world
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    7 months ago

    It fucking sucks that here in CA, the entire state is losing insurers despite the fact that a huge chunk of the population lives in coastal areas with no danger of wildfires.

    • AA5B@lemmy.world
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      7 months ago

      Presumably state laws prohibit discrimination, so their only choice is to cover everywhere in the state or nowhere

      • Cryophilia@lemmy.world
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        7 months ago

        None that I could find.

        I honestly think the insurance companies are taking advantage of this to try to force changes to the California insurance regulation, which is quite strict regarding cost increases to consumers. It’s the only reason I could think of that they would pull out of the entire state and not just the dangerous areas. It’s 2024, the data exists to an excruciating level.

        • michaelmrose@lemmy.world
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          7 months ago

          Insurance is a slush fund which earns interest in between taking in premiums and paying out claims. If you mandate that they lose money the whole game pretty obviously collapses and the losses are unlimited.

          • Cryophilia@lemmy.world
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            7 months ago

            Any industry that is mandatory for some vital facet of life cannot be left to the whims of the market. It should be highly regulated, and preferably state run.

            Price controls are needed to prevent the naked greedy price fixing we see in many other industries.

            • michaelmrose@lemmy.world
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              7 months ago

              Price controls can cause all capital to exit the market. If the state picks up the tab and sets an unreasonably low rate the state may eventually go bankrupt and crease to be able to borrow

              • Cryophilia@lemmy.world
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                7 months ago

                Depends. Monopolies with price controls work well for some industries, like utilities. I do agree that everything should be done to encourage a private market with competition, within reason, but regulation needs to be strong.

    • insight06@lemmy.world
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      7 months ago

      I would have thought California EQ was the peril scaring them all away. Very expensive to reinsure - most commercial property catasrophy models (RMS & AIR are the big ones) peg it as the second most risky North American peril after Florida Hurricane.

      • Cryophilia@lemmy.world
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        7 months ago

        Then those models are fucking shit. San Francisco and Los Angeles are in no danger from wildfire.

        • insight06@lemmy.world
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          7 months ago

          EQ is earthquake. According to USGS, California faces a ~75% chance of a major earthquake in the next 100 years.

          Have a quick google of “California quake risk” for a slew of in-depth (and somewhat scary) articles and research papers.

          • Cryophilia@lemmy.world
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            7 months ago

            Home insurance already doesn’t cover earthquakes though. That’s a separate insurance product, and companies could just stop offering it.