$45M insurance incentive legislation heads to governor’s desk
BATON ROUGE, La. (KALB) - On Friday, Feb. 3, lawmakers passed two bills on the appropriation of $45 million to the Insure Louisiana Incentive Fund, sending the legislation to Gov. John Bel Edward’s desk.
Putting money in the fund, which was created in the 2021 Regular Session as Act 421, targets an effort to entice more insurance companies into doing business in Louisiana.
The Senate passed HB1 by Rep. Jerome Zeringue (R-District 52) in a 37-1 vote after a few hours of questions for Sen. Kirk Talbot (R-District 10), who carried the bill in the Senate. The only vote against came from Sen. Barrow Peacock (R-District 37), who expressed concern over whether the effort would need to happen after every major hurricane.
”To answer your question, are we gonna have, pardon the pun, the perfect storm of the reinsurance market being stressed, Florida, which is where many of these companies are domiciled, which is you know, going under the horrific problems they’re having,” replied Talbot. “You know, I don’t know. But I know this - people need help. We need to respond, and we’re here to solve problems. So, we need to pass this bill and get relief to people that need it.”
The House concurred with the Senate’s amendments, passing the final version of HB1 90-8.
HB2 by Rep. John Stefanski (R-District 42), which specifies regulations around the fund, passed unanimously out of both chambers.
Since Hurricane Laura in 2020, insurance companies have steadily stopped doing business in the state or become insolvent, and several have stopped writing new policies for homeowners south of Interstate 10.
As a result, the policyholders on Louisiana Citizens’ books, the state’s insurer of last resort, have increased four-fold, and those policyholders experienced a 63% premium hike starting January 2023.
Insurance Commissioner Jim Donelon estimates the fund will enable 40,000 Louisiana Citizens policyholders to move to private insurers at a lower premium.
In testimony before the House Committee on Appropriations on Tuesday, Feb. 3, Donelon said seven insurance companies have expressed interest in applying for the funds, and he expects even more to follow. The commissioner also expects the department to dole out almost all $45M to companies. However, any funds not used would fall back into the general fund.
Both chambers had expressed concerns over ensuring safeguards were in place for the proper use of the fund. The House passed amendments to HB1 on Tuesday, adding reporting requirements, an emergency rule provision and a requirement for awarded insurance companies to take on 25% of new policies from Louisiana Citizens’ books.
The Senate Committee on Insurance initially stripped the bill of those amendments Thursday, Feb. 2, amid concerns from some that the amendments should not be on an appropriations bill and that they may fall outside of the session’s call.
However, on Friday, the full Senate added back on reporting requirements and the emergency rule provision. They did not do the same for the policy requirement, rather leaving it up to be added to the rules promulgated for the program.
Lawmakers have repeatedly emphasized appropriating money to the incentive fund is only a temporary solution. They look forward to taking up more comprehensive insurance reform in the 2023 Regular Session, set to start April 10.
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