Lawmakers shelve Citizens rate review bill

BATON ROUGE, La. (AP) - Lawmakers in the House rejected a proposal Tuesday that sought legislative review of large rate increases for customers of Louisiana's property insurer of last resort.

The House Insurance Committee scrapped the idea in a 9-4 vote against the bill by St. Mary Parish Sen. Bret Allain, despite a heavy rewrite that lessened its impact.

The Senate unanimously agreed to require annual rate increases over 25 percent by the Louisiana Citizens Property Insurance Corp. to get approval from the House and Senate insurance committees.

But that faced opposition in the House, so Allain reworked the measure to instead require rate hikes above 25 percent on wind and hail coverage to go to the insurance committees for review, not approval. The committees wouldn't have been able to stop the increases.

"There's no check and balance in it right now," said Allain, R-Franklin. "It's only oversight. It only brings them to the table to explain. It doesn't cap any rates."

Even with the changes, Insurance Commissioner Jim Donelon and others opposed the idea as political meddling that could have created solvency problems for the insurance company and pushed it from its mission of providing coverage only as a last resort.

"What this bill attempts to do in its origin and its purpose is to make Citizens' policies cheaper than the private sector," Donelon said.

The House committee refused to back the rewritten version, killing the bill.

Citizens provides property insurance mostly to coastal Louisiana homeowners and businesses that can't get insurance through the private market.

Allain said he proposed the bill after residents of his coastal parish faced Citizens rate hikes of 171 percent. He said that left some people on fixed incomes choosing between paying for their medicine or their home insurance.

Rep. Sam Jones, D-Franklin, who also represents the area, said in some instances, Citizens insurance bills exceed mortgage bills for homeowners.

Treasurer John Kennedy, who sits on the Citizens board of directors, supported Allain's bill, saying the company is broke and needs more legislative oversight. He said the company was raising rates to deal with its own financial problems.

Citizens' chief financial officer has said he expects the insurance company to have $180 million in revenue for the next year, but $250 million in expenses - and that's without any hurricanes or other weather disasters that require hefty claims payments.

"All this bill does is try to balance the needs of the company with the needs of the people that we're trying to serve," Kennedy said. "We cannot fix this company on the backs of the people of Louisiana and the backs of these policyholders."

Donelon said the company was set up to have higher-than-market rates to encourage people to shop around in the private insurance market rather than rely on the state for insurance. He said the rates were reviewed by his office to ensure they are based on appropriate data and forecasting.

Voting against Allain's bill were: Reps. Greg Cromer, R-Slidell, committee chairman; Hunter Greene, R-Baton Rouge; Mike Huval, R-Breaux Bridge; Nick Lorusso, R-New Orleans; Kevin Pearson, R-Slidell; Alan Seabaugh, R-Shreveport; Kirk Talbot, R-River Ridge; Major Thibaut, D-New Roads; and Ledricka Thierry, D-Opelousas.

Voting for the bill were: Reps. Marcus Hunter, D-Monroe; Robert Johnson, D-Marksville; Vincent Pierre, D-Lafayette; and Gene Reynolds, D-Minden.



Senate Bill 19 can be found at

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