Top Louisiana legislator Tanner Magee undecided on supporting incentive package for insurers
NEW ORLEANS (WVUE) - The special legislative session on Louisiana’s insurance crisis is less than a week away, and the No. 2 leader in the state House of Representatives is not ready to say he will support the lone item on the agenda.
House Speaker Pro Tem Tanner Magee (R-Houma) says too many critical questions remain unanswered before state lawmakers convene next Monday (Jan. 30) to consider whether to place $45 million into an incentive fund for insurers.
“I’m on the fence,” Magee told Fox 8. “I want more information (from Insurance Commissioner Jim Donelon). I’m not a ‘no.’ But I’m not a ‘yes,’ yet, either.”
Donelon says financial incentives are needed to attract more insurers to the state. He says eight insurance companies failed in the aftermath of Hurricanes Laura, Delta, Zeta and Ida.
Magee said, “I think that as part of my due diligence as a legislator is to find out all these questions about what companies are we looking at, who can we really expect to get in before this time period and how much money is it really going to require? I am concerned that $45 million is really not enough to bring a real insurance company into the state of Louisiana.”
Magee said he believes the state should take steps to ensure that insurance companies operating in Louisiana are adequately capitalized in case of major hurricanes.
“I think it’s a two-step thing,” Magee said. “We need to make sure that they have a minimum capitalization, as far as having enough money at least to pay a decent amount of claims out to everybody. I also think we need to mandate what rating agencies are being used to rate these insurance companies, because there’s a lot of fly-by-night rating companies. … I think there’s more industry-standard ones that we could use.”
Meanwhile, insurance premiums in the state are rising.
Dave Clements, co-owner of Clements Insurance Services in St. Bernard Parish, said, “We’re seeing increases of 40%, 50%, 70% or even 80% in some cases.” He said it is a challenge to find cheaper insurance.
“The insurance companies are just taking a shellacking,” Clements said. “They’re spending billions and billions of dollars trying to get people back in their homes. So, unfortunately, those costs are just going to get passed on to the consumers. It’s been a challenge and unfortunately not enough time has passed for those prices to come back down.”
Clements said the few insurance companies that are writing Louisiana policies are being very selective about which properties they cover.
“There are a few companies, but they are few and far between, and their requirements have changed,” Clements said. “They’re requiring a certain level of ‘Coverage A’ and you must be at least $250,000. They’re requiring that your roof only be five years old. And some people just don’t meet these requirements. But the companies have the ability to be restrictive on who they will write, because they’re only going to take the best-of-the-best business right now.”
Magee said many of his constituents were impacted by insurer insolvencies.
“They filed bankruptcy and left the state,” he said of the companies. “And at the end of the day, LIGA -- which is a state entity -- is the one who’s picking up the tab on it. And so I think a lot of people are hesitant to jump back into what I think is best described as fly-by-night insurance companies again, just for the sheer sake of doing it in the appearance of having cheap insurance, which we all want.”
Magee said he expects insurance reform to come up during the regular legislative session which starts in April.
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