Legislature begins special session on Louisiana insurance crisis
BATON ROUGE, La. (WVUE) - A special legislative session got underway Monday (Jan. 30) at the state capitol on the Louisiana insurance crisis. And, right away, state lawmakers began pushing for safeguards to ensure quality insurance companies come into the state.
The purpose of the session is to allow legislators to consider funding a proposed $45 million incentive fund to help entice new insurance companies to the state. Following Hurricanes Laura and Ida, which caused catastrophic damage, eight insurers in the state failed financially and some others stopped writing wind and hail policies in Louisiana.
But lawmakers want assurances that providing insurers state money will inure to the benefit of taxpayers and people who need insurance coverage.
Rep. Jerome “Zee” Zeringue (R-Houma), chairman of the House Appropriations Committee, said, “There’s a lot of folks who, quite frankly, are on the fence and I understand it. I get it. Put me in that number. I think there are a lot of things that we need to do.”
Zeringue is the author of House Bill 1, which spells out that the funds will be used to award grants only to insurers licensed in Louisiana possessing a minimum financial strength rating from AM Best of “B+” or a Demotech financial stability rating of “A.”
“The legislation that’s offered is going to work to allow the money for the program,” Zeringue said. “But within that, we put in some safeguards in the ratings of the companies, to ensure that they’re reputable companies.”
Sen. Royce Duplessis (D-New Orleans) said he agrees more information is needed before a vote is taken.
“I think there’s still more questions than answers and I think the public needs to be clear about the fact that there are lots of concerns,” Duplessis said. “No. 1 is the fact that we have super-high premiums that are crushing homeowners.”
Lawmakers said they don’t want fly-by-night companies entering Louisiana’s insurance market and then not being able to pay for damages caused by disasters.
Rep. John Stefanski (R-Crowley) filed House Bill 2. It would prohibit any insurer with “an officer, director, or controlling shareholder” who had such status with an insurance company that filed bankruptcy or was declared insolvent from receiving any of the incentive program funds.
“If you file for bankruptcy, it’s going to limit the people who can participate,” Zeringue said.
Rep. Kyle Green (D-Marrero) said he will peruse the two pieces of legislation. But he thinks action must be taken to address the insurance crisis.
“I have to go home and take a look at it and read it and see exactly what the bill does,” Green said. “But, as I told you before, I’m in favor of the concept, because something has to be done to provide protection to our citizens, so that they can get insurance.”
Donelon concedes that only five companies participated in the incentive program after Hurricanes Katrina and Rita. But his office says the program encouraged other insurers to do business in the state, even though they did not take part in the grant program.
Zeringue is not convinced the latest incentives will lure enough insurers to Louisiana to ease the press on Louisiana Citizens, the state’s insurer of last resort.
“I’m not comfortable,” he said. “I hope and pray that there are going to be companies to utilize this opportunity and take advantage of it. But, first off, it has to go through the process.”
Duplessis says the legislature’s consideration of incentive funds will not solve the insurance crisis.
“I don’t think anybody suggests that this action is a cure-all, but it could be a first step,” he said. “Safeguards need to be put in place to ensure that we don’t repeat the same mistakes of the past.”
The Appropriations Committee meets Tuesday to begin discussing HB 1 and HB 2.
“The Appropriations Committee will meet and pick up the bills and debate them, and hopefully report them favorably,” Green said. “On Wednesday, we’ll come back in, and that’s when the full House will vote.”
The special session must end by Feb. 5.
Lawmakers also plan to introduce insurance reform bills for the regular legislative session which begins in April.
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