BATON ROUGE, La. (AP) — As Louisiana insurers flee the state and residents face exorbitant and in some cases unaffordable homeowners insurance costs, lawmakers returned to Capitol Hill Monday for a special legislative session. to address the current crisis.
In a state decimated by hurricanes in 2020 and 2021, insurance companies continue to become insolvent, leaving behind tens of thousands of claims for the state’s bailout program to shut down. Other companies have simply decided to leave, determining the risk of remaining in a state that has a front-row seat to climate change, where coastal areas are eaten away by erosion, there is evidence of rising sea levels and devastating hurricanes. it has become more serious. Frequent — outweighs possible monetary reward.
Now lawmakers are considering a bill that would allocate $45 million in excess funds to a newly created incentive program, hoping to attract more insurance companies to Louisiana.
“It is critical that we fund this program, which will save Louisianans money on their home insurance,” Louisiana Insurance Commissioner Jim Donelon said ahead of the special session. “I have spoken with many of our state’s residents and business owners who are struggling to make ends meet and are now seeing insurance costs skyrocket. Some face prices driving them out of their homes.”
Today, Louisiana Citizens, the state’s insurer of last resort and the only option for many residents, has 120,000 residential policies. Before Hurricane Laura in 2020, there were only 36,000 policies. Those who use the safety net insurance company, which by law is the most expensive in the state, face a 63% increase in rates on residential property insurance policies, due in large part to the decline in the number of Louisiana insurers.
In an effort to attract more businesses to Louisiana and reduce the number of residents dependent on the state’s expensive insurer, lawmakers unanimously approved an incentive program during the 2022 legislative session. Under the program, qualified businesses will receive grants from between $2 million and $10 million. In return, those companies will provide 100% of the grant-matching funds they receive. In addition, the new premium that each company must subscribe is at least twice that total amount.
Although lawmakers approved the incentive program last year, no significant amount of money was earmarked. When The Associated Press asked Rep. Jerome Zeringue, the chairman of the Appropriations Committee, why the program wasn’t funded, the Republican said it was a “good question” and one for Donelon, who lawmakers will likely press for an answer. in the next years. days.
While lawmakers and Gov. John Bel Edwards originally hoped to address the insurance crisis during the April regular session, Donelon insisted he couldn’t wait, citing that new insurance companies coming to the state would need reinsurance — coverage purchased for ensure they can pay claims before hurricane season.
Louisiana has faced insurance problems for a long time. More recently, the crisis has been exacerbated by Hurricanes Delta, Laura, Zeta and Ida. Destruction from the storms resulted in more than 610,000 residential property claims in the state, according to data from the Louisiana Department of Insurance. As a result, property insurers had paid $18.4 billion in claims as of June 30, 2022.
Since then, at least 11 companies that wrote homeowners policies in the state have filed for insolvency. A dozen more have withdrawn, canceled or refused to renew existing policies. As a result, tens of thousands of families are paying higher premiums or going without coverage at all.
But with worsening climate change and more frequent hurricanes making landfall, lawmakers and Donelon say the incentive program is just a Band-Aid fix and further insurance reform should be addressed during the state’s April session.
Louisiana will address two bills in this special session, one that appropriates the $45 million and one that restricts the use of funds in the program. Both bills have been referred to the Appropriations Committee, which will meet Tuesday at 9:30 am CST. Lawmakers must adjourn special session no later than 6 pm CST on Sunday, February 5.
Louisiana isn’t the only state hit by insurance problems.
Florida has struggled to keep the insurance market healthy since 1992, when Hurricane Andrew swept through Homestead. It eliminated some insurance companies and left many remaining companies afraid to write or renew policies. In September 2022, Hurricane Ian struck southwestern Florida, causing an estimated $40 billion to $70 billion in property damage.
The Sunshine State has held multiple insurance-focused special sessions, most recently in December 2022 when lawmakers passed a massive Republican-authored bill seeking a billion-dollar reinsurance fund, lowering costs of litigation and forced some clients to leave a state-created insurer. The legislation was designed more to keep private insurers in the state than to immediately save homeowners money.
