Louisiana’s insurance commissioner looking for funds to lure insurers here [The Advocate, Baton Rouge, La.] – InsuranceNewsNet

Louisiana’s insurance commissioner looking for funds to lure insurers here [The Advocate, Baton Rouge, La.] – InsuranceNewsNet #Louisianas #insurance #commissioner #funds #lure #insurers #Advocate #Baton #Rouge #InsuranceNewsNet Welcome to Lopoid

Aug. 1—Louisiana Insurance Commissioner Jim Donelon is trying to get state leaders to identify available funds for a revived incentive program aimed at luring insurers into Louisiana’s troubled market.

The Insure Louisiana Incentive Program was created in 2006 following hurricanes Katrina and Rita, when larger insurers packed up and left the market in droves. State lawmakers earlier this year resuscitated the program as insurers have gone belly up following massive losses from hurricanes Laura, Delta, Zeta and Ida in the last two years. In the past year, seven insurance companies doing business in the state have been declared insolvent.

Donelon said Monday he has reached out to arrange a meeting with Gov. John Bel Edwards, as well as Rep. Mike Huval and Sen. Kirk Talbot, chairmen of the insurance committees in their respective chambers. Donelon indicated he wants House Speaker Clay Schexnayder and Senate President Page Cortez to attend as well.

Donelon declined to commit to a specific total he’d ask for, though he said the state offered $100 million through the incentive program in 2006, funded by surplus dollars from higher tax collections and federal cash infusions. Of that total, $29 million was snatched up.

Donelon hinted that a budget amendment later this year might be the best route to identify funds. He added that the total could be adjusted based on the Consumer Price Index.

“What we are asking is the governor and the legislative leaders to do what we did very successfully after Katrina and Rita,” Donelon told the Press Club of Baton Rouge.

Effectively dormant since the mid-2000s, the Insure Louisiana Incentive Program offers matching grants of anywhere from $2 million to $10 million to insurers who commit to writing homeowner policies in Louisiana. Insurers must fork over at least $2 million of their own and have at least $10 million in capital and surplus on hand to participate.

After a slew of storms in 2020 and 2021 wreaked havoc on the state’s property insurance market, the Legislature retooled the program in this year’s session for property owners affected by Laura, Delta, Zeta and Ida. Changes included creating a dedicated state treasury fund for the program.

Back in 2006, participating insurers had to write policies through Louisiana Citizens Property Insurance Corp., the state’s insurer of last resort, and had to offer them in risk-ridden coastal parishes, Donelon said.

Donelon called the current market a “crisis” of affordability. He said 50,000 homeowners had to turn to the Louisiana Citizens Property Insurance Corp. because their insurance companies cratered. The hope is to lure enough insurers here to move policyholders off the pricey, last-ditch option.

“When 50,000 folks lost their coverage with these failed companies, they had to resort to the market of last resort,” he said. “It is the most expensive — by law — insurer in the state, designed to be (that way) so that it doesn’t become a market of choice.”

Donelon also expressed fears over possible “redlining” in the reinsurance market for businesses that write policies in Louisiana. Redlining is a pejorative term for discrimination against potential customers. Reinsurance is coverage insurers buy to manage their risk.

Losses the last two years have been large, Donelon said, and there’s chatter in the reinsurance industry of a failed company that tried to get additional money for a named storm that made landfall in Texas and “came through Louisiana unnoticed.”

“Those reinsurers have been paying those bills — $23.3 (billion), $23.7 billion for Laura and Delta, Zeta and Ida — over the past year and a half,” he said. “That level of expense is problematic. Having said that, they’re in the risk business. They’re in the insurance business. The price will go up for sure based on the cost of reinsurance, but the industry will come back to that market ultimately, no doubt about it.”

Huval, R-Breaux Bridge, said he had not yet heard from Donelon but looked forward to the prospect of meeting with him and other leaders.

Huval, an insurance agent, said the Insure Louisiana Incentive Program helped him find insurers back in 2006 to write policies for his clients. He said the program will help consumers by adding more insurers to the market.

“We need it even more now than we did then,” Huval said.

The biggest question for state leaders, Huval said, will be figuring out how much money is needed now.

“Time has passed,” he said. “Will the same amount fill the same interest? Do we need more? Do we need less? How much do we allocate per company?”


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