NEW ORLEANS (WVUE) – A new Louisiana law takes effect Wednesday (Jan. 1) that will allow insurance companies operating in the state to drop at-will a percentage of their property insurance policies.

Earlier this year, Gov. Jeff Landry signed into law a bill that repeals the so-called “three-year rule.” It had barred insurers from dropping policies that had been in place for at least three years.

“It’s going to be restricted per ZIP code,” New Orleans insurance broker Dan Burghardt said. “How many are going to take advantage of that? I think it’s going to be on a per-case basis, based on the condition of the house.”

Peter Robins-Brown, executive director of the nonprofit advocacy group Louisiana Progress, said he is concerned about the end of the three-year rule.

“My main concerns, especially around the three-year rule, are that they were all driven by the insurance industry,” Robins-Brown said.

He feels the same about many of the insurance reform measures passed by the legislature in 2024. Many were championed by state Insurance Commissioner Tim Temple, a former industry executive.

“We didn’t see anything in insurance reform that was really consumer-focused,” Robins-Brown said. “The insurance industry said that this package of reforms, highlighted by ending the three-year rule, was going to drive prices down by creating more competition. And we haven’t seen that yet.”

New policies written during the latter part of 2024 already are subject to the repeal of the three-year rule.

John Ford, deputy commissioner of the Public Affairs division in the Louisiana Department of Insurance, said in a statement, “Commissioner Temple has been meeting with insurers and reinsurers since before he took office to discuss what issues are preventing them from doing more business in Louisiana. The law that was most consistently cited as a barrier was the three-year rule.

“Act 9 amends the three-year rule, so that it only applies to people who already had it before Aug. 1, 2024, and so insurers can submit a plan to drop up to 5% of their three-year rule policies beginning in 2025. These changes should increase competition and stabilize rates in Louisiana’s homeowners’ insurance market. “

Also taking effect Jan. 1 are changes to property insurance rate levels for Louisiana Citizens, the state’s insurer of last resort. The approved revisions should result in decreases of .5% for the FAIR Plan and 4.4% for the Coastal Plan policies.

“Citizens is lowering its rates statewide 5.4%,” Burghardt said.

In May 2025, a new law goes into effect that requires insurers to disclose all offered discounts that might reduce premium costs on home and auto insurance policies.

“Property insurance rates have stabilized,” Burghardt said. “You don’t see these big rate increases now.”

However, he cautioned that things like inflation can affect premiums.

“Customers who get their renewal notice can’t confuse a rate increase with an adjustment in their replacement cost,” he said. “Insurance companies are making sure your home has replacement value and that still applies.”

Another reform passed by the legislature this year gives insurers more time to handle claims.

“Act 3 will improve the hurricane claims experience for homeowners and insurers by simplifying the claims process and reducing costly and unnecessary litigation, while protecting the right for homeowners to take legal action when needed,” Ford said.

Louisiana’s grant program to help homeowners fortify their roofs remains in place for the new year.

“The Louisiana Fortify Homes Program is a major part of making our state more insurable in the long term, and we are making several changes to it so that it will make as much of a positive impact as possible,” Ford said. “Those changes include removing the program sunset date, converting it to a lottery system, targeting grant funding to Louisiana’s coastal zone and identifying a permanent source of funding.”

Temple has said there should be more insurance reforms, and that he hopes there will be a special session to tackle more in the new year. Ford said that if a special session on insurance is called for 2025, the main focus will be auto insurance.

“In Louisiana, car accidents result in bodily injury and litigation at about twice the national average,” he said. “If a special session is called, Commissioner Temple would work with legislators and other stakeholders to focus on reforms that address those and other factors that make Louisiana the least-affordable state in the country for auto insurance.”

Robins-Brown says auto insurance rates are adding to the burden property owners are feeling.

“Our property insurance and auto insurance crises are really hurting people, maybe more than any other issue in this state,” he said.

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