Four years after Hurricane Ida devastated southern Louisiana, homeowners like Jennifer and Dean Bye remain in a damaged home, awaiting payouts from a bankrupt insurer. FedNat Insurance Company, which covered the Byes, collapsed amid climate-fueled disasters, highlighting vulnerabilities in the property insurance market. The couple's struggle underscores broader challenges for policyholders in high-risk areas.
Hurricane Ida struck southern Louisiana on August 29, 2021, rapidly intensifying from Category 1 to Category 4 due to hot Gulf of Mexico waters. The storm dumped a foot of rain, caused over 100 deaths, and resulted in $75 billion in economic losses across 17 states.
Jennifer and Dean Bye, residents of Paulina, Louisiana, saw their home severely damaged: 'The living room fell in and everything had to be gutted,' Jennifer said. 'We lost everything we owned.' Despite having homeowners insurance from A+-rated FedNat Insurance Company, the Byes received less than $90,000 before its bankruptcy, and they are still waiting on $450,000 from the Louisiana Insurance Guaranty Association (LIGA). LIGA manages over 500 pending FedNat claims, overwhelmed by insolvencies from 11 Louisiana insurers between 2021 and 2022.
FedNat acquired Maison Insurance in 2019, expanding in Louisiana and Texas. But 2021 brought four hurricanes and a winter storm, leading to over $100 million in net losses. The company dropped 13,500 Louisiana policies to focus on Florida, then sought to cancel 56,000 Florida policies in 2022. Despite a 70% rate increase over five years, FedNat entered liquidation in fall 2022 after admitting overstated cash positions.
Dean Bye contacted 68 insurers before securing a $3,900 annual policy from Allstate, now risen to $5,000. 'Nobody is writing,' he said. 'Still, to this day, nobody is writing.'
This case reflects a national trend: 1.9 million policies dropped in states like Florida, Louisiana, California, and Texas from 2018 to 2023, with seven Florida insurers bankrupt in 2021-2022. State FAIR plans have surged—Louisiana's residential policies nearly tripled from 2021 to 2023—as private markets retreat. Experts like Daniel Aldrich of Northeastern University describe an 'era of polycrisis,' where disasters increase and recovery lags. 'How do you do that to people?' Bye asked. 'How do you insure people in the South, take all of these premiums, and then just belly-up?'