When Hurricane Katrina threatened New Orleans in August 2005, Mona Lisa Saroy thought she was safe.
A Louisiana Poet Award recipient for several years, author and educator Saroy inherited the 110-year-old “double shotgun” home in most of the black 7th wards where she was born and raised. The family embarked on Hurricane Betsy in 1965, and the house rose several feet from the ground. However, at the last minute, a friend came, who had a vision that Saroy had always dreamed of the water coming, and Saroy decided to evacuate with her older neighbor and her dog.
That was a good thing. The entire Saroy block sank under 9½ feet of water when the water-retaining levee broke down around town. Her home was so badly damaged that it was destroyed and had to be completely rebuilt. This took nearly 15 years and a process that didn’t hang out with the insurance company, got it to get what Saroy believed was worthy after paying his premiums for years.
Everything was said and “I’m grateful that I’m still here,” Saroy told USA Today in June. “I lived elsewhere, and for me this is home.”
It was not the only structure that broke down in New Orleans in August 2005. There was also a shortage of insurance safety nets that were supposed to support homeowners when the tragedy was attacked. Twenty years after the hurricane, analysts believe in the climate-driven insurance crisis that has swept America over the past few years.
“When just going back and thinking about data and (extreme) events start to happen more regularly, Katrina is at the front edge of it,” said Jeremy Porter, head of climate for First Street, a real estate data provider. “If we had known better, it would have been a storm that taught us what would come from a climate change perspective.”
Data from the industry group Insurance Information Research Institute shows the magnitude of damage caused by the storm. “Katrina generated the largest single loss with $41.1 billion and more than 1.7 million claims ($41.1 billion, more than 1.7 million claims) across six states,” according to a research institute. Approximately 63% of the $41.1 billion paid was 975,000 people on Louisiana’s claims. The Institute notes that the total does not include $16.1 billion in losses from floods insured by the National Flood Insurance Program.
The importance of flood insurance and homeowner insurance was highlighted this summer when fatal flash floods killed dozens of people in central Texas.
It is impossible to know for sure how much insurance has changed in areas that have been hit by storms in the 20 years since Katrina. For example, the amount of premiums and the number of coverages. There is no single dataset containing all the information needed for these calculations. And with the major 2021 reorganization of the way national flood insurance program risks are calculated, things need to be even more careful.
Here are some of the things we’ve learned since Katrina and some of the things we’ve learned.
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Flood insurance is important, but homeowners often do not exist
According to some estimates, only 10% of homeowners affected by Katrina had flood insurance at the time of the storm. That’s part because many homeowners couldn’t afford it, said Oji Alexander, CEO of Housing+, a nonprofit in New Orleans — but some have assumed the risk of flooding is either lower or less than it turns out.
“Flood insurance means people chose not to do that if you don’t need to,” he said. “It is important to show the distinction between Hurricanes Katrina and Rita and the failure of the federal levee system. The storm was not overflowing with cities. It was a failure of the levee system that caused floods.”
Subsequent research has demonstrated that individual homes and the entire neighborhood benefit when homeowners are covered by flood insurance. However, flood insurance is not as widely available as homeowners insurance. That’s an additional cost and many homeowners may believe that federal emergency assistance will cover them if something happens.
Porter’s research shows that there are currently 5,000 aggressive flood insurance through Orleans Parish’s National Flood Insurance Program, and 5,000 aggressive flood insurance has been generated from around 28,000 properties that FEMA believes are taking into account flood-prone areas where such insurance is mandatory. However, the First Street model suggests that the Federal Emergency Management Agency is drastically lurking.
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Homeowners’ insurance is split
“Katrina has a lot of very sad stories,” said Amy Bach, executive director of Insurance Watchdog’s nonprofit policyholders. “My body is floating. There’s a “dead man on the roof.” But what has since become the insurance market is one of these sad stories. ”
Bach calls Katrina the “basin” moment. As insurers withdraw from certain regions and strengthened the scope and exclusion of water damage, they predicted many of the issues consumers are currently facing nationwide as insurers withdraw from certain regions and strengthened exclusions.
Certainly, as the storm set back, many insurers left Louisiana for good, deciding that it was too expensive and dangerous to continue doing business in the state. It covered about 8% of state households in the state shortly after Louisiana’s citizen Katrina, the state insurance company. This was down to 1.5% by 2015 as the committee’s office worked to attract private insurance companies. However, another 2020-2021 round of 2020-2021, which includes Hurricane Laura and Ida, has once again shared at 2.57% since the end of the end of 2024.
By 2015, 22 new private insurance companies were doing business in Louisiana. “It offers a wide range of options for homeowners,” the state insurance commissioner boasted. But these recent storms have been sacrificed. Dozens of insurance companies were declared insolvent between 2021 and 2023, according to the Insurance Information Institute.
Meanwhile, according to Bach, many of the new participants in the market are lightly regulated startups that may not pay the state’s bankruptcy fund.
Similar dynamics are being made in other states. California’s struggle to keep in mind that insurance companies writing policies and concerns about solvency over national planning attracted public attention in the aftermath of the Los Angeles fire in early 2025.
“Maintenance insurance is an important benefit people need,” Bach told USA Today. “It’s not only economically safe, it’s linked to the ability of people who own homes and have mortgages. I think there’s a need for a hybrid government and private solutions. The idea that the private market is trying to solve all the problems for me is naive. History doesn’t support that.”
Costs are rising sharply
Over the past five years, the first street analysis of FEMA and insurance rate declaration data shows that premiums have increased by 303% in at least one zip code, while flood insurance coverage has increased by 102% in average. Homeowner premiums in that city have increased on average by 78% over that period.
Alexander of People’s Housing+ has seen his own premiums increase by more than 200% in the six years he lived in New Orleans. Alexander, whose organization helps homeowners strengthen their homes against climate risks, says he lives in “a fairly new home built to very high standards.”
Saloy says he knows people who pay almost $6,000 per year in insurance premiums for newly built homes and almost double the amount.
First Street Porter points out that the state’s regulations are even higher with the lid on premium spikes. Meanwhile, homeowners are not only increasingly reduced by private insurers, but Louisiana’s citizens needed a premium increase of nearly 90% in 2023 as reinsurance costs spiked.
“These are all indicators of risk that exist in the region and are not properly priced in the insurance market,” Porter told USA Today. “In many respects, Katrina was the first of many climate events to highlight that issue, and insurance dynamics over the past 20 years have kept up since then.”
