Grants to fortify homes may miss poor households

Aerial photograph of homes with blue tarps
After a string of costly disasters starting with Hurricane Laura in August 2020, many insurance companies have stopped writing new policies. Photo by Wes Muller

This story was first reported by Louisiana Illuminator and republished with permission.

Louisiana’s insurance commissioner and state legislators have touted their creation of a new grant program to help homeowners lower their property insurance premiums, but some advocates and lawmakers worry the money won’t go to those who need it the most. 

It’s called the Louisiana Fortify Homes Program, and state Insurance Commissioner Jim Donelon said he expects the application period to open in October. The program will offer grants of up to $10,000 for eligible homeowners to retrofit their roofs to new building codes. They call for better fasteners and seals that allow roofs to withstand winds of up to 150 mph and keep water from leaking through to the wood below the shingles.

Louisiana has been in the midst of an insurance crisis. After a string of costly disasters starting with Hurricane Laura in August 2020, many insurance companies have stopped writing new policies in certain areas of the state, several pulled out of Louisiana entirely and nearly a dozen others went out of business. It has caused homeowner premiums to skyrocket in certain areas.

Homes with stronger roofs should generate fewer property damage claims, and that should translate to lower insurance costs. Property owners who don’t qualify for the grants could still get significant discounts on their insurance premiums if they retrofit their homes or buildings to the fortified standards, and that goes for both residential and commercial buildings. 

During their 2023 session, lawmakers set aside $30 million for the grants. At up to $10,000 per recipient, the program should “fortify” at least 3,000 homes statewide. Unlike loans, grants are monetary gifts that recipients don’t have to pay back.

However, the Louisiana Department of Insurance (LDI) seems keen to give away the money on a mostly first-come-first-served basis. So far, Donelon has laid out only a handful of eligibility requirements, none of which prioritize the grants for homeowners who are poor or who live in areas where insurance costs have skyrocketed.

“That is this commissioner’s philosophy in a nutshell,” said Andreanecia Morris, president of the Greater New Orleans Housing Alliance. “When you talk about affordability, he just doesn’t get it.” 

Morris said her organization, which is a nonprofit collaboration of advocates for affordable housing, has met with Donelon’s office several times to discuss instituting needs-based eligibility priorities for the grants, but she said the commissioner has shown little interest in the idea.

She said the state should give the money to lower-income folks who wouldn’t otherwise be able to afford a new roof.  

“If it’s first-come-first-served, you run the risk of wealthy people taking advantage of this program,” Morris said. “You have to be strategic with this. You have to get it to those who need it most.” 

Some moderate and progressive lawmakers agree, but Louisiana’s Republican-dominated legislature is generally reluctant to fund initiatives that solely help low-income residents.

LDI Deputy Commissioner John Ford said an income component for the program was discussed during the legislative process but gained little support from lawmakers. 

Nonetheless, Donelon has regulatory authority over the program and could possibly institute some eligibility rules, though the legislature can undo them. Morris and even some conservative lawmakers said Donelon should look into narrowing who is eligible to receive the grants. If he can’t or is unwilling to, Morris said she hopes lawmakers will amend the program next year to include such parameters.

So far, the only eligibility parameters are that applicants must have an owner-occupied home in good shape that can pass inspection from a licensed fortified home evaluator.

In a phone interview Friday, Rep. Matthew Willard, D-New Orleans, said LDI should institute an income-cap or at least prioritize low-income applicants and those who live in higher-risk areas for the first round of grant funding. 

Donelon has said the areas most affected by the insurance crisis are south of Interstate 10 in Orleans, Jefferson and St. Tammany parishes. 

“Below I-10 is really suffering,” Willard said. “If you don’t have any income prioritization, if you don’t have any regional prioritization, those people will continue suffering.”

Rep. Richard Nelson, R-Mandeville, offered similar comments but has less faith in the overall impact of the program. Nelson, who is running for governor on a slightly more moderate platform than his Republican opponents, pointed out that the funding is only enough to help 3,000 homes. 

“To me, it would make sense to prioritize those with lower incomes,” Nelson said in a phone call. “Higher-risk areas should also be prioritized … but it’s kind of a drop in the bucket in the whole scope of things … I don’t think it’s going to necessarily address our wider insurance crisis.” 

When Donelon pitched the grant program to the Louisiana Legislature, he modeled it after one already in place in Alabama, which has seen more than 35,000 homes built or upgraded to the fortified standard over nearly a decade. Donelon has said he hopes to replicate that success for Louisiana.

However, Morris said Louisiana has different problems and risk factors than Alabama. She also pointed out what she considers a key difference between the two programs. Alabama included a requirement that insurers provide at least a 20% discount to homeowners who meet the fortified standard. Louisiana requires insurers to provide a discount but does not specify an amount. 

Willard doesn’t see that as a big problem. The legislation he sponsored that ushered in the discount requirements provides for an actuarially adjusted amount that will reduce premiums at the same rate of risk reduction, he said. 

In other words, if a new roof reduces a house’s risk by 20%, then the insurer must reduce the premium by an equivalent amount. It is, however, the insurance company who will perform that calculation, though Willard said a homeowner will be able to challenge the calculation if they don’t agree. 

In an emailed statement, Ford, who serves as Donelon’s spokesperson, said a mandate for a specific minimum discount “would be arbitrary and would likely have an adverse effect on the availability of insurance for consumers.” He didn’t elaborate.

Sen. Sharon Hewitt, R-Slidell, a conservative gubernatorial candidate who also worked on Fortify Homes Program legislation, agreed with prioritizing eligibility based on geography but not income. First-come-first-served grant programs are always problematic because the demand often exceeds the funding, she said.

“I would be supportive of a program that prioritized homeowners below I-10 first, as those are the communities with the biggest need for fortified roofs,” Hewitt said in a text message.