NU Online News Service, Aug. 27, 3:48 p.m. EDT

Legislative and regulatory restraint, strong statewide building codes, and incentive programs to entice new insurers to Louisiana have each contributed to the state's recovery since Hurricane Katrina, said speakers at a recent conference.

The storm–the most destructive natural disaster in the United States, which caused more than $41 billion in insured losses when it occurred–happened five years ago. Katrina struck New Orleans on Aug. 29, 2005.

At the Five-Year Katrina and Rita Insurance Summit in Louisiana, State Insurance Commissioner Jim Donelon said about 930,000 claims were filed as a result of the storms. Losses paid to date are about $29 billion–about $25.5 from Katrina.

Yet five years after Katrina, Mr. Donelon said the insurance market in Louisiana is "stronger, more efficient and fairer." Louisiana adopted the first ever statewide building code following the storm, he said.

Commissioner Donelon said Louisiana is "still trying to attract" new companies to the state, but he declared an incentive program, which provided matching grants to insurers who chose to write in Louisiana, a success. Five companies took advantage of the program, receiving $29 million in grants, he said.

Kevin Cunningham, Louisiana counsel for the American Insurance Association, said that following Katrina, there was a "great bit of legislation that would have done some bad things to our [commercial insurance] industry," but lawmakers "exercised some restraint" and the result has been a vibrant market despite the fact that more than half of the losses from Katrina were absorbed by business insurance.

Market share among primary homeowners insurers has increased since Katrina. Today, 92 percent of the market is held by admitted insurers, 2 percent by surplus insurers and 6 percent by Citizens Property Insurance Corp., the insurer of last-resort.

The policy count at Citizens, once ballooned to about 170,000, is now at 132,000 thanks to a depopulation program, reported Citizens' chief executive John Wortman, who is retiring soon.

The state-run insurer handled 80,000 claims from Katrina and Hurricane Rita and incurred losses of $1.5 billion, Mr. Wortman said. About 77,500 of the claims are closed.

Currently Citizens is the third-largest property insurer in Louisiana.

"Over the next several months we hope to be the fourth-largest," Mr. Wortman said. Another depopulation round is scheduled for Dec. 1, he said.

The summit included an update from Mike Park, director of the Louisiana Recovery Field Office for the Army Corps of Engineers, on the vast levee system being constructed.

The Army Corps has spent $8 billion on the entire system since 2005, and $5 billion to $6 billion more is under contract to finish the system of levees, flood walls, pump stations and gates to protect Louisiana against a 1-in-100-year event by 2011, said Mr. Park.

Also in 2011, modeler Risk Management Solutions (RMS) said it is releasing a new hurricane model to incorporate the levee system in New Orleans.

The flood threat to the city continues to increase since the city is actually sinking because of its location, RMS said. The threat is compounded by the risk in global sea levels as a result of climate change and the increased level of hurricane activity in the Atlantic, RMS said.

Special Reports /

Officials: Post-Katrina Louisiana Insurance Market Is Strong

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