Lawmakers are trying to curb insurance costs in Louisiana.
Posted at 10:44 am Wed Apr 5, 2023
The Louisiana Department of Insurance will take more steps to regulate insurance premiums in the state during the upcoming legislative session.
One such step would be funding the Louisiana Fortify Homes program.
This legislation, which passed last year but was not funded, would provide qualifying Louisiana homeowners, in most cases, with grants to strengthen their roofs to withstand severe weather “using methods that meet or exceed the Insurance Institute for Business and Home Safety’s Fortified Home Standards.”
Louisiana State Representative Mike Huval believes this program will help mitigate home damage and loss during hurricanes.
“One of the best ways we can prepare is to use stronger materials and construction methods when we build and modify our homes,” he said.
During the upcoming legislative session, they are looking to secure $20 million in funding for the program. Huval said that once the program is funded, it should “take off pretty quickly.”
Participating homeowners will have to meet eligibility requirements and pay for permits, inspections and similar fees.
LDI is also introducing legislation that would require insurance companies to provide justifiable discounts or credits to policyholders who build or retrofit their homes to meet enhanced standards.
In 2021, Act 30 was passed to allow insurance companies to provide such discounts.
“This will ensure that policyholders who invest time, money and effort in building or retrofitting their structures to strengthened standards will reap the full benefits of this decision.”
LDI will also seek an additional $20 million for the Insure Louisiana Incentive Program – which financially incentivizes insurance companies to create new business in Louisiana to offset the insurance crisis Louisiana faced with Hurricanes Laura and Delta in 2020.
“The idea is to get these policies removed from Citizens as quickly as possible, and as we saw after Katrina, that will attract other companies to also come in and start writing,” said state Sen. Kirk Talbot.
The need for this program is the result of “an unprecedented combination of back-to-back catastrophic hurricane seasons and a legal environment that has led to a greater crisis in Florida … as well as a global reinsurance shortage that hit us all at the same time, crippling the industry and leading to bankruptcy of nine insurance companies operating in our state,” said Jim Donnellon, Louisiana Insurance Commissioner.
LDI will distribute $42 million to the 8 insurers approved by the Joint Legislative Budget Committee. That will generate nearly $170 million in new premiums, at least half of which will be written in south Louisiana, according to Donnellon.
He estimated that 40,000 policies would be depopulated by Louisiana Citizens — the state’s insurer of last resort — and at least 50,000 new policies would be written by the end of the program’s first year.
Talbot said the program has been more successful than they expected. “We blew the first $42 million right after going in.” The approved underwriters asked for about $62 million.
If the additional $20 million in funding is made available to the program, approximately $250 million in premiums will be written in Louisiana, he said.
He also said monitoring of the solvency of insurers operating in Louisiana has improved. A third party has been hired to do monthly solvency monitoring and quarterly legislative reports to “monitor their reinsurance, monitor their solvency levels like never before.”