A number of Louisiana legislators mentioned they aren’t but ready to fund a householders insurance coverage incentive program backed by Insurance coverage Commissioner Jim Donelon, even when Gov. John Bel Edwards calls them right into a particular session in early February.
“I feel the Home is skeptical of all the things,” Home Speaker Professional Tempore Tanner Magee, R-Houma, mentioned in an interview Wednesday. “There’s simply no buy-in on what [Insurance Commissioner Jim Donelon] is proposing as being an answer.”
As just lately as final week, Senate President Web page Cortez, R-Lafayette, and the Edwards administration mentioned it was doubtless that lawmakers would convene in a February particular session to place $45 million right into a incentive fund for insurance coverage firms that Donelon is touting as a repair to the state’s insurance coverage disaster.
However in interviews Wednesday and Thursday, many legislators mentioned they weren’t ready to switch that cash in a February particular session – and even when the Legislature convenes for its common session in April. They don’t seem to be satisfied Donelon’s incentive program would alleviate the state’s insurance coverage issues.
“I want extra data earlier than I log out on that,” mentioned Home Democratic Caucus Chairman Sam Jenkins of Shreveport.
The state has seen a number of insurance coverage firms go beneath or pull out of Louisiana after being walloped through the 2020 and 2021 hurricane seasons. The collapse of the market is dumping extra householders’ insurance policies on the state’s insurer of final resort, Louisiana Residents Property Insurance coverage Corp., and driving up housing prices.
In communities alongside Louisiana’s coast, property insurance coverage premiums might now come near or exceed the price of house mortgages, mentioned legislators who characterize these areas.
To handle this disaster, Donelon desires to implement an incentive program just like one he put in place after hurricanes Katrina and Rita in 2005. Insurance coverage firms keen to write down insurance policies for higher-risk properties would obtain public grants to assist cowl their prices. The objective is to divert insurance policies from Louisiana Residents, which is required by regulation to cost their protection larger than the non-public market.
Lawmakers initially signed off on this proposal from Donelon throughout their 2022 legislative session, however they didn’t put any cash behind it. Now the insurance coverage commissioner desires $45 million to fund his concept, and extra legislators are elevating questions.
“Do we want assist with insurance coverage? Completely,” Home Speaker Clay Schexnayder, R-French Settlement, mentioned. “However is that this the suitable plan?”
Magee and a handful of others aren’t satisfied the preliminary Katrina and Rita incentive fund was profitable, as Donelon has repeatedly claimed, and so they query whether or not that very same technique must be used once more.
Whereas extra insurance coverage firms started writing insurance policies within the aftermath of Katrina and Rita, it might have been as a result of Louisiana went a number of years with out a main storm, not essentially due to the incentives supplied, they mentioned.
Among the smaller companies in that Katrina and Rita insurance coverage program additionally went stomach up after Hurricane Ida, in response to The Occasions-Picayune.
“I feel Commissioner Donelon thinks that folks down listed below are clamoring for a bunch of shitty insurance coverage firms like we had earlier than and we’re not,” mentioned Magee, who represents communities in Terrebonne Parish affected by Hurricane Ida. “We would like good insurance coverage firms which are truly going to be companions right here and pay claims and do all of the issues they had been purported to do.”
Magee recommended the cash might need extra quick impact if it was used on to decrease premiums in Louisiana Residents, the place folks should get insurance coverage protection if they will’t discover it on the non-public market. Sen. Bret Allain, R-Franklin, agreed and mentioned he would favor to see the state put $45 million into making Louisiana Residents a greater, long-term choice.
“Half of those firms defaulted that we introduced in and propped up,” Allain mentioned. “I don’t know why we don’t use the cash to prop up Residents as a substitute. We might have a sustainable product of final resort.”
Magee additionally mentioned the cash is likely to be higher spent on a program that allowed folks in hurricane-prone parishes to renovate their houses with extra storm-proof options, thereby making extra properties enticing to personal insurers.
Legislators have additionally expressed an curiosity in utilizing Donelon’s incentive fund to entice firms nonetheless working in Louisiana to write down extra insurance policies in higher-risk areas. They don’t seem to be as concerned with luring new, untested firms into the market with public funds.
In an interview Wednesday, Donelon mentioned the cash might, and sure would, be spent on firms already working in Louisiana. One agency in Louisiana has even approached him about getting public help retroactively for insurance policies it has already written.
Donelon mentioned he will even make sure that the individuals who led insurance coverage companies that failed previously aren’t concerned with the businesses that entry future incentives.
“Not on my watch will any of these gamers take part on this state-funded incentive program,” he mentioned.
The insurance coverage market crash in Louisiana additionally isn’t solely the results of back-to-back large hurricanes in 2020 and 2021, Donelon argued. Some firms went beneath as a result of they had been additionally working in Florida the place, in Donelon’s opinion, the state laws had been too unfastened.
However a part of legislators’ wariness about Donelon’s program is that they don’t know what firms may profit from the $45 million he’s requesting. Donelon has mentioned 9 companies have an interest within the monetary incentives, however he hasn’t shared the names of these firms with lawmakers but.
Senate President Web page Cortez, R-Lafayette, and Schexnayder mentioned Thursday they wish to know what particular firms are contemplating Donelon’s program.
With out that data, Schexnayder mentioned placing $45 million into the motivation fund can be akin to agreeing to purchase a automobile with out figuring out something about its make or mannequin.
Home Conservative Caucus Chairman Jack McFarland, R-Jonesboro, took it a step farther, and mentioned he not solely desires to know who the businesses are, however he additionally desires a possibility to query them.
“I wish to ask concerning the premiums they’re going to supply,” he mentioned.
Not all legislators are skeptical of Donelon’s plan although. Cortez mentioned he would doubtless assist the motivation program, even when it is just a “Band-Assist” to quickly relieve a number of the home-owner insurance coverage strain.
Gov. John Bel Edwards additionally expressed no reservations about Donelon’s proposal on the governor’s radio present Wednesday. Edwards mentioned he believes he and lawmakers had been on the identical web page about supporting Donelon’s idea, although there was disagreement about whether or not a particular session was crucial.
Donelon is not only asking lawmakers handy over $45 million – he desires them to agree handy over the cash a while inside the subsequent month throughout a particular assembly of the Legislature.
The insurance coverage commissioner mentioned he wants the cash early, earlier than the Legislature convenes in April, so firms buying reinsurance – basically insurance coverage for insurance coverage firms – will comprehend it’s obtainable to them this spring.
Donelon additionally mentioned the longer the state waits to arrange the motivation fund, the extra households can be coping with giant fee will increase. Louisiana Residents elevated premiums 63% this yr. With every passing month, extra households are going to see these new fee hikes go into impact, he mentioned.
Nonetheless, Edwards would doubtless be requested to name the particular session and didn’t appear satisfied Wednesday that it could achieve success but. He mentioned there was a “distinction of opinion rising” amongst lawmakers whether or not a particular session must be convened.
Donelon can have at the very least another probability to persuade lawmakers of the necessity for his program and the particular session. He’s scheduled to talk earlier than the Legislature’s Joint Legislative Committee on the Price range Friday.