Louisiana Homeowners Pay 3rd Highest Insurance Rates

Homeowners in Louisiana have been opening their wallets in recent years when it comes to homeowners' insurance.

According to newly released data from the National Association of Insurance Commissioners (NAIC), the Bayou State remains the third most costly homeowners' insurance market nationwide, only trailing fellow southern states Florida and Texas. The most recent data available is from the 2007 season.

According to the NAIC, the average Louisiana premium for a standard homeowners' policy in 2007 was $1,400, an increase from $1,257 in 2006. That 11.4 percent gain was the biggest for homeowners' insurance in the nation.

Louisiana Insurance Commissioner Jim Donelon stated he wasn't shocked by the data because 2007 was when the majority of the rate increases following Hurricanes Katrina and Rita took effect. Following the storms, a number of insurers also increased the insured value of homes on individual's policies.

Although not yet released, Donelon indicates the 2008 figures will show improvement because that's when the insurance department's signature reform, a program to provide insurers multimillion-dollar grants to do business in Louisiana, started.

Part of that program witnessed several new insurers come to the state and take policies out of Louisiana Citizens Property Insurance Corp., which by law sells the costliest insurance in the state. When these insurers started selling policies directly to the public, they did so at rates that proved cheaper than what many older carriers were charging.

Despite reported stabilization in the homeowners' insurance market in Louisiana, state officials believe it will be challenging for the state to dip below the third spot in the rankings. Officials attribute this to the fact that the next block of states has premiums more than $300 lower than in Louisiana.

Florida surpassed Texas as the country's most expensive homeowners market in 2007, with premiums growing by 10.7 percent to an average of $1,534.

One interesting note that has a big impact on the rates is that Texas, Florida and Louisiana are the country's most hurricane-prone states.

Premium figures reflect not just rates, but real estate values, the expense to rebuild, the type of construction and location.