Special session on insurance wraps up after lawmakers gave final approval to incentives for insurers
NEW ORLEANS (WVUE) - Louisiana lawmakers ended a special session on Friday (Feb. 3) that was focused on the state’s insurance crisis.
Lawmakers gave final approval to House bills 1 and 2.
HB 1 places $45 million into a state fund to incentivize insurance companies to write policies in Louisiana. HB 2 spells out that no insurer that filed bankruptcy or was declared insolvent can receive the financial incentives.
Insurance Commissioner Jim Donelon implored legislators to appropriate the money for the incentive fund. He said without it some residents would lose their homes as premiums rise causing mortgages to increase. Donelon says eight insurers operating in the state failed financially after Hurricanes Laura and Ida in 2020 and 2021 respectively.
Sen. Kirk Talbot authored the 2022 legislation that reactivated the incentive fund which was first used after Hurricane Katrina.
“Basically, what the bill does it requires that funds be used to award grants only to insurers licensed in Louisiana, possessing a minimum financial strength rating of AM Best B+ or a Demotech financial stability rating of an “A”,” he said when addressing fellow senators before the vote on HB1.
But up until the end some lawmakers exhibited doubts that the grants will attract enough insurers to improve the insurance crisis. After Katrina, only five insurers participated in the incentive program.
Sen. Barrow Peacock, R-Shreveport, pressed Talbot for answers.
“Why would any insurance company want to take a risk of a policy in Citizens or in the coastal parishes two months before hurricane season starts?” said Peacock.
Talbot replied, “Great question and the answer to that would be, first if you look at what happened when the Blanco administration did this, they did this roughly at the same time and they had no problem, you know, having five companies come and take and get $29 million in grants.” “The insurance crisis left thousands of property owners with no place else to go but the state’s insurer of last resort, Louisiana Citizens.”
The failed insurers coupled with other insurance companies refusing to write new wind and hail policies left 125,000 policyholders relying on Citizens for coverage. Donelon’s staff says 10 insurers have expressed interest in the incentive program.
But Talbot did not make any promises as he pushed for passage of HB1 in the senate.
“I don’t have a crystal ball, I can’t sit here and say I guarantee you we’re going to have this, but I’m just, you know, I got to go by the information that I receive,” he said.
While the senate made some changes to HB1 the House where the legislation originated quickly concurred in the amendments allowing the session to end.
“I know this was not a scheduled event that we were looking forward to but each and everyone of you showed up and put your work boots on and got in here and got the work done and I appreciate that,” said House Speaker Clay Schexnayder.
Governor John Bel Edwards issued the following statement upon the conclusion of the special session:
“I am grateful to Senate President Page Cortez, House Speaker Clay Schexnayder, and the entire legislature for their willingness to come in for this brief special session. This appropriation into the Insure Louisiana Incentive Fund will only partially address the current crisis by bringing more insurers into our market, limiting premium increases by fostering competition, and reducing the number of Citizens policies and the attendant risks of statewide assessments to address the impact of future catastrophic weather events.”
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