Louisiana Insurance Commissioner Advocates for Special Session on Home Insurance Policy Crisis


Louisiana Insurance Commissioner Jim Donelon met with resistance of lawmakers on Friday as he introduced them at a special February session to fund an insurance incentive program aimed at controlling homeowners’ costs.

“People are literally going to lose their homes if we don’t have a special session,” Donelon said during a joint legislative committee meeting on the budget at the state Capitol.

But several lawmakers weren’t entirely convinced by Donelon’s urgent appeal. They expressed skepticism about the need for a special session in February. Some were also not happy with the specific program that Donelon presented.

“I’m not sure,” House Appropriations Committee Chairman Jerome Zeringue, R-Houma, said when asked if he already supports the special session.

“I don’t want to go through a special session if you don’t have all the numbers to get it through on both sides,” Rep. C. Denise Marcelle, D-Baton Rouge, said, wondering if Donelon could rally enough legislators. vote for his program.

Louisiana saw several insurance companies sink or leave Louisiana after the state was battered during the 2020 and 2021 hurricane seasons. The market crash is dumping more home insurance policies on the state’s insurer of last resort, Louisiana Citizens Property Insurance Corp., and drives up housing costs.

As homeowners face astronomical increases in insurance, Donelon wants to implement an incentive program similar to the one he implemented after Hurricanes Katrina and Rita in 2005. Insurance companies willing to underwrite policies for high-risk properties would receive public subsidies to help cover their costs. The goal is to divert policies from Louisiana citizens, who are required by law to price their coverage higher than the private market for competitive reasons.

Lawmakers unanimously approved Donelon’s insurance incentive program framework last year, but they haven’t invested in it. The commissioner now wants lawmakers to call a special session transfer $45 million to the fund.

The insurance commissioner said the $45 million transfer could not wait for lawmakers to begin their regular session in April. Insurance companies wishing to participate in the program are currently negotiating the purchase of reinsurance – essentially insurance for insurance companies. They won’t be able to take out more policies in Louisiana later this year if they haven’t purchased enough reinsurance this spring to cover the additional business.

Donelon told lawmakers that approving the $45 million transfer “as soon as possible” could also save thousands of households from seeing big increases in their homeowner’s premiums over the next three months by integrating earlier. insurance companies in the program. But many lawmakers seemed unconvinced that handing over the funding two months early would necessarily spare their constituents those cost increases, because no companies have yet committed to participating in the program.

Sen. Fred Mills, R-Parks, asked Donelon to provide an estimate of the insurance savings individual homeowners could expect from the $45 million allocation. Donelon said he wasn’t sure his staff could calculate such a projection.

“I don’t know how to do that,” the commissioner replied, later adding, “I’ll try.”

Several lawmakers also questioned whether Donelon’s proposed program would achieve their primary goal – offloading thousands of insurance policies from Louisiana citizens and putting them on the private market.

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When lawmakers approved the insurance program framework last year, they required insurance companies that received money from the incentive fund to absorb policies from Louisiana citizens. Donelon had wanted to include a requirement for Louisiana citizens, he said, but Senate Insurance Committee Chairman Kirk Talbot, R-River Bridge, removed it during the legislative process.

From a practical standpoint, Donelon said he expects insurance companies to pursue households with Louisiana Citizens policies — whether necessary or not — because those policies are the most expensive. But the lack of certainty seemed to frustrate lawmakers.

“There’s no guarantee that a citizens’ policy will be depopulated if we pass this agenda,” Senate Speaker Page Cortez R-Lafayette said.

Lawmakers also questioned whether Donelon was open to an alternative solution, which involved putting more money into Louisiana citizens rather than private insurance companies. Donelon pushed back against this suggestion, which he said would lead to a large state-run insurance program that the state could not afford.

“I strongly urge you not to go down this path,” he said.

Some of the private companies that took public funds after Hurricanes Katrina and Rita eventually went bankrupt or left Louisiana. Others may have stayed but are no longer willing to cover properties in hurricane-prone areas. Lawmakers don’t want to see a repeat of this scenario, where they invest in companies that end up abandoning their constituents.

The insurance commissioner appears to have been caught off guard by lawmakers’ pushback, particularly after they voted unanimously to put the framework for the incentive scheme in place last year.

“Frankly, I didn’t think there would be any hesitation on the part of the legislature to fund what they unanimously created,” Donelon said.

Currently, there is no other option on the table to deal with the insurance crisis. Lawmakers asked Donelon what would happen if they didn’t funnel $45 million into the incentive program as requested. He replied that he was not sure what he would do.

“I don’t have an immediate plan B,” Donelon said.

Gov. John Bel Edwards is expected to make an announcement over the weekend or early next week on whether the special session will take place. It is required to give lawmakers at least seven days notice before convening, which means the session will not start until the week of January 30 at the earliest.

Legislative leaders said the session should last at least five days because it takes at least that long to get a bill through both the House and the Senate.



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