New Orleans, Louisiana – On Tuesday (April 9), a gathering at the University of New Orleans brought together economists, realtors, and industry stakeholders to delve into forecasts for the region’s economic and real estate landscapes. Notably, discussions highlighted the persistent challenges posed by the ongoing insurance crisis, with state officials emphasizing that a swift resolution is unlikely.
Dr. Robert Penick, Director of UNO’s Institute for Economic Development and Real Estate Research, delivered insights indicating an upward trajectory in commercial real estate activity. “The prognosis is positive; the city’s commercial sector is on the mend, and there’s room for improvement in the residential market, particularly if insurance rates can be mitigated,” remarked Penick.
Since Hurricanes Laura and Ida wreaked havoc on parts of Louisiana, insurance premiums have remained prohibitively high, exacerbating the region’s recovery efforts.
Ron Henderson, Deputy Commissioner of Consumer Advocacy at the Louisiana Department of Insurance, underscored the gravity of the situation: “This is undeniably an insurance crisis—a longstanding issue that demands attention.”
Responding to queries about the scarcity of insurers offering wind and hail policies in specific regions, Henderson acknowledged the insufficiency, stating, “The current pool of insurers is woefully inadequate.”
Meanwhile, legislative efforts to overhaul Louisiana’s insurance laws have gained traction at the state capitol. Notably, proposed reforms include discontinuing the practice of insurers terminating policies held for three years or longer—a move supported by newly appointed Insurance Commissioner Tim Temple. Despite these endeavors, Henderson cautioned against expecting immediate relief: “There’s no quick fix. It’s a gradual process. Increased market participation will eventually lead to improved rates and competitiveness.”
The soaring cost of property insurance continues to burden homeowners, impeding access to homeownership, particularly for younger demographics. “When you factor in all these expenses, it becomes increasingly challenging, especially for young couples,” noted Penick.
While citing Florida’s recent insurance reforms as a benchmark, Henderson stressed that such measures don’t always translate into reduced premiums immediately. “Reforms take time to yield results. It’s a two- to three-year endeavor,” remarked Henderson.
As the 2024 Atlantic Hurricane season looms, some insurers adopt a cautious stance, refraining from underwriting new policies until the season concludes in November. “It’s a calculated risk; some insurers opt to wait it out,” Henderson elucidated.
Amidst these challenges, Henderson, cognizant of consumer frustrations, emphasized the importance of providing support to affected residents. “The past few years have been incredibly tough. But my role is to assist those in need—to offer solutions and support,” Henderson asserted.
Addressing economic concerns, Penick acknowledged the pressing issue of high living costs. “The cost of living remains a significant hurdle. Only when interest rates and insurance premiums decline will we witness meaningful change,” Penick remarked, expressing optimism for potential growth in the housing market.
Furthermore, Penick noted a gradual resurgence in labor availability within the tourism sector, signaling a positive shift in the employment landscape. “Some restaurants are witnessing an influx of workers, signaling a gradual recovery,” Penick observed.
In summary, discussions at the UNO gathering underscored the multifaceted challenges confronting Louisiana’s economic and real estate sectors amidst the persistent insurance crisis, with stakeholders emphasizing the need for sustained reforms and support mechanisms to foster long-term resilience and growth.
