Lawmakers mull special session to address insurance crisis

BATON ROUGE, LA. (BRPROUD) – Louisiana is in an insurance crisis and the state’s top lawmakers are considering calling legislators back to Baton Rouge to pass a bill aimed to help.

Insurance Commissioner Jim Donelon has been asking legislators for months to call a special session to allocate money to an insurance incentive fund.

“We need to fund these incentive grants and enable these companies to take this money to the reinsurance market sooner rather than later so that they can get their reinsurance in place,” Donelon said.

The fund was created during the 2022 regular legislative session, but was left empty. Donelon believes the time is now to shift $45-million from the current year’s extra tax revenue into the account.

“We’re in conversation with about nine companies right now that are interested in participating in this program. Some of them are already doing business in our state, most of which are not and are looking to come to our state and participate,” Donelon said.

The incentive will be around $5-million given to select companies that they will then match for their capital equaling $10-million. It is seen as their “skin in the game” to be more careful with their investments. They will also be regulated to write policies totaling up to $20-million otherwise they could owe some of the incentive money back to the state.

Currently over 120,000 people are on the pricey insurer of last resort, Louisiana Citizens. Recently a required hike in the cost of the premium launched prices up by 63% and is being phased in for some policyholders.

“This is a relatively painless way for the state to help those folks who are, frankly, in many cases teetering on the brink of losing their homes,” Donelon said.

House and senate leadership are expected to meet with the governor to discuss the decision. Legislative leaders had brushed off Donelon’s request until now, saying it could wait until the regular session.

“Every month that we wait, another bunch of 10,000 policies on average in citizens go up in premium by 63%,” Donelon said.

A similar program was implemented following Hurricanes Katrina and Rita, which Donelon said brought a half dozen companies to Louisiana. Over the last two years about 20 insurance companies have closed or stopped writing policies in Louisiana.