Louisiana insurance crisis sparks ‘most ambitious’ reform package to date

The incentive program works like this: Insurers that agree to do business in the state are eligible for matching grants of between $2 million and $10 million. Approved insurers must then match that amount and write $2 in premium for every dollar accepted. The ultimate goal is to transition policyholders from Citizens back to private insurers, Donelon has said.

Donelon provided an update on the status of the incentive program. Eight insurers have been approved to receive $42 million, Donelon said, resulting in nearly $170 million in new premium written.

“I anticipate that we will see 40,000 policies come out of Citizens by the end of the program’s first year and 50,000 additional new policies written during that time,” the commissioner added.

Insurance crisis

by John Hilton

Louisiana Insurance Commissioner Jim Donelon calls the next phase of plans to stabilize the state’s homeowner insurance market “the most ambitious reform we’ve attempted to achieve in my 17 years as insurance commissioner.”

Notably, the package of property insurance reform gives lawmakers a second stab at the Louisiana Fortify Homes Program, which fortifies roofs against high hurricane and tropical storm winds. The Legislature declined to fund the program last year.

Donelon, who is not running for reelection, is putting a full-court press on legislators to find the money this time. The program would provide grants of up to

$10,000 for homeowners to retrofit their roofs to standards set by the Insurance Institute for Business and Home Safety.

The initial budget request is for $20 million, said state Rep. Mike Huval, chairman of the House Insurance Committee.

“One thing that we cannot pass a law against in our state is to keep hurricanes from coming. They’re coming,” Huval said. “I believe this program will help a lot of folks resist storm damage in the near future while potentially reducing residential property insurance costs to our state in the longer term.”

Donelon successfully steered the first phase of his plan to lure insurers back to Louisiana — via financial incentives — through the legislature earlier this year.

Louisiana is wracked by an insurance crisis that much resembles the crisis that followed Hurricane Katrina and Hurricane Rita in 2005: Insurers are leaving the state rather than risk huge losses that accompany major storm and hurricane events.

So far, 11 insurers have gone broke and another dozen or more stopped selling policies, leaving desperate homeowners to rely on the state-run insurer of last resort, Louisiana Citizens Property Insurance Corp. As the insurer of last resort, Citizens is required by law to charge 10% higher than the highest private insurer in each parish.

Read the full story online: innmb.com/lacrisis23

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.