Donelon expects insurers approved for incentives to receive state funds soon

Published: Mar. 20, 2023 at 6:59 PM CDT
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NEW ORLEANS (WVUE) - Now that Louisiana lawmakers have approved eight insurance companies to receive millions in state grants, Insurance Commissioner Jim Donelon said Monday (March 20) he looks forward to the final step: Entering into cooperative endeavor agreements with the companies.

“Within the next week or 10 days,” Donelon said. “And after that, the checks will be issued and the companies will start writing (new Louisiana property policies), probably in the middle of next month.”

Insurance agent and branch owner Stephen Lovecchio of TWFG Insurance said the incentive program “is definitely going to help,” but said the cost insurers are having to bear buying re-insurance is a big factor in rising premiums.

“The reinsurance rate has to go down,” Lovecchio said. “Whether I have an insurance company or you have an insurance company or anybody has an insurance company, they’re buying hurricane insurance from London and Bermuda. They all buy it at basically the same price. So, until that rate goes down, will the overall rates go down?”

Donelon said he thinks Louisianans will see a small reduction in premiums “by the end of the year.”

But Donelon added, “I’m not anticipating that existing companies with their price structure in place will lower their premiums to compete with the new companies. But there will be pressure, because I believe these new companies will be offering cheaper prices than the existing companies.”

Lovecchio says having more competition in the insurance market has benefits.

“The more companies you have competing -- instead of just having that one company that has the most expensive -- some other carrier might have a better price for it, just because their algorithm is a little bit different.”

But he said property owners should not expect rates to retreat to their level of several years ago.

“Inflation is super important in all of this,” Lovecchio said. “I mean, the cost to get a house fixed is 50 percent more than it was a couple of years ago. We’re not going to go back to 2018, probably ever. So right now what we’re trying to do is just stop the rates from going even higher.”

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