BATON ROUGE — Legislators kicked off a special session Monday to address one agenda item: whether to approve $45 million for an incentive fund to persuade home insurers to come back to the state.
Two bills were introduced in the House Monday: one to appropriate funds for the Insure Louisiana Incentive Program and a second to place some restrictions on the use of those funds.
The second bill would exclude insurance companies that filed for bankruptcy or were declared insolvent or were owned by a parent company that was declared insolvent.
Lawmakers quickly adjourned for the day after referring the bills to the House Appropriations Committee. It is scheduled to consider them on Tuesday.
The special session, called by Gov. John Bel Edwards, comes after eight insurance companies covering Louisiana residents failed and a dozen more stopped writing policies in Louisiana after destructive hurricane seasons in 2020 and 2021.
The state insurer of last resort, the Louisiana Citizens Property Insurance Corp., is covering 125,000 policyholders, or about twice more than expected, amid the insurance-company failures.
Lawmakers are addressing the issue now instead of when the regular session starts on April 10 in hopes of giving the companies more time to get reinsured. That means they would purchase a plan from another company to minimize financial risk in case of a major claims event.
State Insurance Commissioner Jim Donelon, who urged the governor to call the session, said he is ready to make his case to legislators for the urgency of the incentive fund.
“It is critical that we fund this program, which will save Louisianans money on their homeowners insurance,” Donelon said in a statement. “I’ve spoken to too many of our state’s residents and business owners, struggling to make ends meet, who are now seeing skyrocketing insurance costs. Some are facing being priced out of their homes.”
This is the worst homeowners’ insurance crisis Louisiana has faced since Hurricanes Katrina and Rita in 2005, according to Donelon. He said an incentive program was successful in rebuilding the insurance market after those storms.
A similar program was created and passed unanimously in the 2022 legislative session. Now it is up to lawmakers to fund it.
The program would require companies to match state funds dollar for dollar, with grants ranging from $2 million to $10 million. Insurance companies would also be required to remain in the state for five years or to return the money.
Donelon said his department has had inquiries about the program from seven companies so far.
The money would come from $925 million in extra revenue the state is expecting to collect this year.
The session has the support of Senate President Page Cortez, R-Lafayette, and House Speaker Clay Schexnayder, R-Gonzales.
“Commissioner Donelon has stated that time is of the essence with regard to the Legislature’s funding of the incentive program and thus the need to go into a special session,” Cortez said in a statement. “While we understand this will not completely solve the crisis we recognize the urgency.”
Schexnayder said in a statement that the House will work toward more permanent solutions in the regular session but that this program “is a short term band-aid that can be a first step toward a more long term solution.”
Not all lawmakers are eager to start the session, however, with some worrying about approving the money without the guarantee of broader insurance reforms passing in the regular session.
Donelon said he plans to advocate for more long-term solutions in April. But he said this funding needs to pass now so his department can start issuing grants as soon as possible.
Lawmakers hope to complete the session by Friday – and must finish no later than 6 p.m. on Sunday.
The session will cost taxpayers about $60,000 per day, according to The Advocate.
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.