BATON ROUGE, La. (LSU Manship School News Service) – The House on Wednesday, Feb. 1, approved bills to spend up to $45 million to encourage insurance companies to return to the state and to prevent firms that went bankrupt or were declared insolvent from using the money.
The House Appropriations Committee approved the two bills Tuesday before sending them to the House, where representatives questioned state Insurance Commissioner Jim Donelon about the details of the program.
The funds would be used to reduce the financial risk for insurance companies that resumed writing home and other property insurance policies in the state.
Donelon emphasized the urgency of the program for the 125,000 residents covered by the state’s insurer of last resort, the Louisiana Citizens Property Insurance Corp, as well as for those who cannot afford insurance at all.
Without the program, Donelon said, “Thousands of people are going to lose their homes.”
The bill now goes to the Senate, where the president, Sen. Page Cortez, R-Lafayette, has voiced support for it.
Donelon looked back at the success that a similar incentive program had in the aftermath of hurricanes Katrina and Rita in 2005.
Five companies participated then, and about a dozen others followed them back to the state.
“The insurance industry is bird-like in their movement,” Donelon said.
The commissioner ensured legislators that competition in the market would lower rates for policyholders. But not all lawmakers seemed convinced.
“You’re much more confident than I am on that issue,” Rep. Lawrence “Larry” Frieman, R-Abita Springs, said.
Legislators also worried the incentive fund would not provide long-term relief to policyholders.
Rep. Chad Brown, D-Plaquemine, strongly criticized the commissioner, saying the incentive program was Donelon’s plan A, B, C and D.
“Did it really work last time? Or did we just get lucky?” Brown asked of the similar program implemented after Katrina.
Brown is not the only member of his caucus unsure of the commissioner and his plan.
“Democrats are focused on helping struggling homeowners and rescuing our collapsing insurance market,” said Rep. Sam Jenkins, chairman of the Democratic Caucus, in a statement Monday. “But we must remember this crisis occurred on Commissioner Donelon’s watch.”
Jenkins said they must ensure the incentive fund is not a “cash grab for big insurance companies.”
Still, some legislators think the plan they view as imperfect is better than nothing for the thousands of coastal residents struggling to insure their homes.
“With reservation, I am going to support this bill,” Brown said, pointing to his coastal constituents who are desperate for relief.
He said he hopes that if another storm hits next year, the companies will stay.
Rep. Timothy Kerner, R-Jefferson, whose own premium increased by $12,000, implied he also has reservations about the bill but urged his colleagues to support it.
“This is not the perfect bill, but it is the only bill,” he said.
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Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.