NEW ORLEANS (WVUE) – Relief could be on the way for thousands of Louisiana homeowners struggling with inflated insurance premiums, after Insurance Commissioner Jim Donelon announced that several companies have signed up for the state’s incentive program.
The grant package was created in a special legislative session last month, with the hope of luring companies to write new policies in Louisiana and take policyholders off the rolls of Louisiana Citizens, the state’s insurer of last resort.
Donelon, 78, made the announcement Tuesday (March 14), along with the news that he does not plan to run for re-election after serving as Insurance Commissioner for the past 17 years.
According to Donelon, nine companies have applied for the state’s incentive program, seeking the following grants:
- Allied Trust Insurance Company – $6.5 million
- Applied Underwriters – $10 million
- Cajun Underwriters Reciprocal Exchange (CURE) – $5 million
- Constitution Insurance Company – $10 million
- Elevate Reciprocal Exchange – $5 million
- Gulf States Insurance Company – $3.6 million
- SafePoint Insurance Company – $10 million
- SafePort Insurance Company – $2 million
- SureChoice Underwriters Reciprocal Exchange (SURE) – $10 million
The Louisiana Department of Insurance (LDI) said $45 million in state funding was allocated by the legislature. The applying companies are collectively seeking $62 million in grant funding. House Insurance Committee Chairman Mike Huval agreed to file a bill during the upcoming session to appropriate an additional $17 million, if needed.
“We’re counting on this, all of us — insurance industry and consumers,” said Dan Burghardt of Dan Burghardt Insurance. “These companies that are applying for this money have shown stability.
“We feel real good about it.”
Companies would be expected to write four times the amount they receive in new premiums.
“If Company A decides that it gets $5 million, the requirement for this incentive is that they have to put up $5 million. In return for that, they have to write twice that,” Burghardt said. “So they would be asked to write $20 million in new business in our area.”
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The Insure Louisiana Incentive Program is a redux of the incentive program devised post-Katrina. Multiple insurers declared insolvency or stopped writing new policies in South Louisiana entirely, sending premiums soaring and policyholders onto the state’s insurer of last resort, Louisiana Citizens.
More than 100,000 new policyholders moved to Citizens, which implemented a 63 percent residential rate hike on Jan. 1.
“The interest rate has gone up; insurance premiums doubling, tripling. You’ve got the National Flood Insurance Program — the 2.0 Risk Rating — throw that in there,” Burghardt said. “It’s almost like we’re trying to get rid of homeowners.”
Burghardt said he’s hopeful the companies agreeing to write new policies will depopulate Citizens’ rolls by moving policyholders off the insurer.
LDI will review the applications before approving grants, but the state said it hopes these companies will be writing new policies by April.
Meanwhile, the field to replace Donelon remains wide open, with only one major candidate declared thus far: insurance businessman Tim Temple.
“We all were of the impression that Commissioner Donelon was committed to running again for the office,” said longtime insurance lobbyist Kevin Cunningham. “It did take us at somewhat of a surprise that he chose not to run again.”
Cunningham had some words of advice for the person who will fill Donelon’s shoes.
“Be prepared to address some of what we call the man-made crisis in this state, as far as lawsuit abuse, fraud abuse and overregulation of the insurers who are doing it right,” he said.
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Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.