Louisiana can do a better job preparing its citizens for and protecting them from catastrophe.

Louisiana must do a better job to prepare for another major hurricane, not only by rebuilding the levees and improving evacuation plans, but in creating a catastrophe fund to protect citizens from the economic fallout of a storm. Increased insurance premiums and little financial support to rebuild homes and businesses have slowed down the state’s recovery and forced many citizens to question whether it makes sense for them to return.

The State of Louisiana is facing an insurance crisis, and it needs a comprehensive, integrated solution to better prepare for and protect its citizens from catastrophe.

Citizens Property Insurance Co., Louisiana’s state-run insurance agency, levied special assessments on policyholders to pay off claims from Hurricane Katrina. And the company, which by law charges 10 percent above market rate so as not to compete with private insurers, has proposed a 31.7 percent rate increase due to the high level of risk to properties in Louisiana. Many private insurers will not write policies for the highest-risk properties in the state.

Louisiana Governor Kathleen Blanco and Representative Karen Carter (LA) have both expressed interest in a catastrophe fund for this state. According to a December 15, 2006 article in The Advocate, Representative Carter, Chairperson of the House Insurance Committee, said she wants insurance companies and regulators to stop 'whining' and forward proposals that would produce cheaper policies to insure property from hurricane damages.

Rather than waiting for another crisis, ProtectingLouisiana.org believes lawmakers should make it a top priority to create a comprehensive, catastrophe management solution now.  At the heart of the solution is a state catastrophe fund.  Financed by private insurance premium dollars, the fund will help protect consumers and ensure that basic, competitive coverage is will exist for them.  The fund will grow tax free, and its monies can only be used to help pay claims for mega-catastrophe.  Such a solution would establish needed financial protections before the next catastrophe strikes, while also mitigating the damage of a future catastrophe by improving building codes, strengthening first responders, improving land use planning, enhancing public education and incorporating a process of continuous improvement.

The comprehensive plan would encourage and enforce stronger building codes, to help minimize damage and speed recovery when a catastrophe strikes.  This is an investment in the future, whereby upfront costs mitigate what would otherwise be astronomical damages and fallout; for every dollar put into mitigation, we can save $3 to $5 in future losses. Also of the utmost importance, the plan includes special attention for strengthening first responders and prevention and mitigation of disaster through consumer education.

The Louisiana State Catastrophe Fund will integrate the most effective components of the Florida Hurricane Catastrophe Fund and the California Earthquake Authority, both of which have helped avoid a collapse of their state insurance markets in the wake of major catastrophes.

Learn more details regarding a comprehensive, integrated solution, including strengthening first responders, preventing and mitigating problems through stronger building codes and consumer education, and advocating for a financial backstop.