SPECIALSESSION

IIABL has worked with Commissioner Donelon and legislative leadership to include provisions in the funding bill to regulate the financial solvency of insurers that are issued a grant under the Incentive Program. In addition to the traditional risk-based capital financial evaluations of insurer solvency, the Commissioner will evaluate the adequacy of insurer reinsurance programs using catastrophe model stress tests against their books of business. The Commissioner will take whatever action is necessary to ensure that insurers that receive grants under the Incentive Program remain financially solvent.

The House Appropriations Committee heard HB 1, which would provide $45 million in funding for the Insure LA Incentive Program on Tuesday, January 31, 2023. The bill passed out of committee without objection.

The program is almost identical to the one created after Hurricanes Katrina & Rita to attract

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Homeowners insurers back to Louisiana. Insurers who are willing to commit capital to write new Homeowners policies are eligible to receive a matching grant from the state. Insurers who receive grants must write 50% of Homeowners policies in south Louisiana. Grant money is put in an escrow account and is earned 20% per year for five years…IF the insurer writes the required number of policies. If insurers do not meet the requirements the state can claw back grant money.

The three-hour committee hearing focused on two questions. Will the incentive program really result in insurers writing new policies and moving policies out of LA Citizens to the private market? And will the insurance companies attracted by the incentives be financially stable?

Commissioner Donelon testified that he already has 7 insurers that want to participate in the Incentive Program and would collectively request the full $45 million Insurers identified included

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Allied Trust, Centauri, Cajun Underwriting Reciprocal Exchange (CURE), Elevate, SafePoint, Sure Choice, and an insurer who asked to remain insurance reforms to improve the insurance market environment to make Louisiana more attractive to insurers in order to attract new insurers to our state.

Tort reform is still important, but the political reality is that tort reform is not possible until we have a new governor in 2024.

Some of the insurance reform ideas would reduce excessive “social inflation” of claims. The bad faith claims statute needs to be clarified to avoid unnecessary litigation. Roofers, appraisers and building consultants need to be licensed, permitted, and regulated. Insurers should be able to require policyholders to sign a sworn statement of proof of loss.

Additional reforms would ease regulatory burdens on insurers. Insurers need more flexibility in the rate approval process so that they can charge the premiums they need to continue to write business. Approval of rates and forms need to be streamlined to improve speed to market.

Funding of the Louisiana Fortify Homes Program would improve construction and improve the longterm claims experience from catastrophe claims.