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Many things happen when a named tropical system enters the Gulf of Mexico during hurricane season. Evacuation plans are drafted, city and state officials are placed on alert, and crucially, insurance companies stop writing new policies until the storm has dissipated.

The reasoning behind the temporary halt is straightforward: no one can predict with absolute certainty what a named system will do and what specific area the storm will affect. But, with the state of Louisiana’s insurance market already in disarray, a series of temporary halts to new insurance plans could be extremely damaging this hurricane season.

Mirambell Realty CEO Craig Mirambell said all realtors in South Louisiana have to be prepared for delays and cancellations during hurricane season every year.

“We’ve definitely had it happen where you’re about to close at the end of the month, and you’re booked out a month in advance, and then all of the sudden a hurricane pops up in the Gulf, and we have to delay everything a day or two until the named storm is done,” Mirambell said. “That has happened more often than not, and then on rare instances, we’ve had situations where we didn’t close because of a named storm in the Gulf, and then after the storm passed, the property took on damage and was not in the same or better condition than when the client wrote the offer, so we had to deal with that. It’ll either be a repair or the cancellation of a contract.”

Mirambell said contracts signed during hurricane season feature an addendum stipulating that the buyer can get out of the contract if the status of the property changes due to a storm. The contracts are also automatically extended if a named storm happens to form during the final days of negotiations.

While those potential delays are seen as the price of doing business in South Louisiana, Mirambell said any extra delays during this hurricane season, which begins on June 1 and runs through November 30, could cause major disruptions if the limited number of insurance carriers active in the state is impacted.

“We’re just still dealing with the insurance struggle as a whole,” he said. “With regards to closings and sort of normal delays, it will be just another headache that we deal with.”

Louisiana Insurance Commissioner Jim Donelon said the insurance market has evolved since 2005 in such a way that Louisiana insurance rates are more at the mercy of global catastrophes than ever before. Before Hurricane Katrina made landfall, causing an estimated $23 billion in damage, most Louisiana insurance carriers were based in the state.

Now, with Louisiana’s insurance covered mostly by companies based outside of the United States, international insurance market fluctuations can have strong impacts on the local market. Donelon said the impacts of Hurricane Ian, wildfires across Australia, and floods in Germany last year were felt in Louisiana insurance markets.

During the relative lull after Hurricanes Katrina and Rita in 2005, Donelon said the number of Louisiana residents on Citizens Insurance, the state’s insurer of last resort, plummeted. That freed up the market, resulting in lower insurance premiums across the board. Coming off a slow hurricane season in 2022, the absence of named systems in the Gulf this year could be similarly beneficial.

“What we had last year was a blessing, and we need, as is being predicted, a below average hurricane season to back that up with the benefit of last year,” Donelon said. “If we had another 2020-2021 season, with four hurricanes in 13 months, totaling $23 billion in damage, there’s no question it would devastate our capacity and the availability of insurance.”

As residents across the Gulf South region prepare for a possibly active season in 2023, Donelon said he’s hoping the early predictions are true, and the area will be blessed with a quiet Gulf. If that is the case, Donelon said he will jump into action to maximize the benefits and leverage as many Louisiana residents as possible off of Citizens.

“We’ve done this once before, after Katrina and Rita, we know how to do it, and we are confident it will be successful again, as it was 15 years ago,” he said.


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