Louisiana House Advances Bills To Address Insurance Crisis

BATON ROUGE, La. (AP) — Louisiana House legislators begrudgingly, but with bipartisan support, advanced a $45 million funding bill for an incentive program designed to entice more insurers to the state.

Many described the program as a band-aid solution to Louisiana’s ongoing insurance crisis. Some vocalized their displeasure over the lack of long-term reform options to address the issue that has plagued the state since a series of detrimental hurricanes in 2020 and 2021. And others questioned Insurance Commissioner Jim Donelon’s confidence in the program, which is a revival of the one created in 2006 when insurers packed up and left the market in droves following hurricanes Katrina and Rita.

But in the end with only two bills proposed this special session, one being the $45 million funding bill and another pertaining to restrictions of the proposed appropriation, lawmakers were hopeful that the legislation would provide relief to struggling residents — especially in a state where property insurance has become unaffordable for many. The measures next face debate in the Senate.

“This is not the perfect bill, but it is the only bill,” said Rep. Timothy Kerner, who has seen his own homeowners’ insurance premium skyrocket from $6,000 to $18,000. “It is the only hope for South Louisiana, so I beg you to support this bill.”

Louisiana is in the midst of an insurance crisis, exacerbated by hurricanes Delta, Laura, Zeta and Ida in 2020 and 2021. The storms’ destruction generated a combined 800,000 insurance claims totaling $22 billion. As claims piled up, companies that wrote homeowners policies in the state went insolvent or left — canceling or refusing to renew existing policies.

The decreasing number of insurers forced many residents to turn to the Louisiana Citizens Property Insurance Corporation, the state-run insurer of last resort and the only option for many residents. Currently the safety-net insurance company, which is required to charge 10% above market prices and is about to boost its rates by 63%, has 120,000 residential policies. In 2021 there were only 41,000 policies.

In the hopes of making the market more competitive and home insurance premiums more affordable, lawmakers last year passed the incentive program but did not put any significant money behind it — hence the current $45 million funding bill. Under the program, qualified companies will be awarded grants between $2 million and $10 million. In return, those insurers must provide 100% matching funds for the grant. In addition, the new premiums required to be written by each company is at least two times that total amount.

Donelon said 10 insurers are interested in participating in the program, seven of which are already writing in Louisiana. While the commissioner said he can’t guarantee that the program will decrease premiums, he hopes it will “stabilize” the market and allow about 40,000 policyholders to get off Louisiana Citizens. To make sure of this, the House approved an amendment that would require companies who take the incentive to write 25% of their coverage for property owners who are currently covered by the state-run insurer.

Donelon attributed his confidence in the incentive program to a similar one nearly 16 years ago, At that time, the program was allotted $100 million and $29 million was spent, which brought in five new companies. While Donelon described the 2006 program as a “proven success” lawmakers felt otherwise — noting that not all of the grant money was disbursed, the mass insolvencies since then, the current climate of Louisiana’s insurance market and destructive hurricanes frequenting land more often, forcing companies to flee.

Lawmakers also were vocally upset that this was the only solution put before them to address an issue that has been described as dire. Many reiterated that while the incentive program may be a short-term solution, legislators must return to the regular legislative session in April to discuss long-term reforms.

“If you say, ‘This is the only bill’ and ‘This is the only option we have’ I get that, but that’s part of the problem. We should have had more options to deal with this,” said Democratic Rep. Edmond Jordan, who voted against the legislation.

Despite all this, most lawmakers agreed that addressing ongoing woes couldn’t be delayed, and the bill passed 90-8.

“I am going to vote for this bill in the hopes that it works, however false those hopes may be,” said Rep. Chad Brown, a Democrat who used to work for the state insurance department. “I hope we get lucky, I really do.”

The bill will be presented to the Senate Finance Committee Thursday afternoon.