Bill To Address Louisiana Insurance Woes Advances

BATON ROUGE, LA. (AP) — Over the years Cashona Lavergne has watched the cost of her property insurance climb in Louisiana, so much so that she debated selling her home.

Instead, she opted to offput her rising premium — which accounts for more than half of her mortgage payment — with a second job. But the Baton Rouge mother has seen the toll skyrocketing insurance costs have taken on some of her neighbors who can’t foot the bill.

“A lot of my neighbors are moving or put their house up for sale because they can’t afford to live here anymore,” Lavergne said.

Simply put, homeowner’s insurance has become nearly unaffordable in the state. Following a series of detrimental hurricanes that resulted in hundreds of thousands of claims, insurers continue to go insolvent or have opted to take their business elsewhere. Nearby, Florida has had similar, if not worse, insurance woes.

In the hopes of offering residents relief, Louisiana lawmakers Thursday — the fourth day of a special legislative session to address the ongoing insurance crisis — continued to advance a $45 million funding bill to pay for an incentive program designed to lure more insurers to the state. The legislation passed through the Senate Finance Committee Thursday and will be heard on the Senate floor Friday afternoon. The measure was already approved by the House, 90-8.

“Everyday someone is telling me ... that they are on the verge of not being able to afford their home any longer,” Louisiana Insurance Commissioner Jim Donelon told lawmakers during this week’s special session. “I truly believe that if (the funding bill is not passed), thousands of homeowners are going to lose their homes.”

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.

The average annual property insurance premium of a Louisiana Citizens' policyholder is $4,400, said Denise Gardner, Donelon’s chief of staff. Nationally, the average annual premium for property insurance in 2019 was $1,272, according to the most recent data from the Insurance Information Institute.

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.

The Senate will reconvene Friday at 12:30 p.m. to debate the funding bill, along with another piece of legislation pertaining to restrictions of the proposed appropriation. The legislature must adjourn the special session no later than Sunday at 6 p.m.