Louisiana passes emergency bill to address insurance crisis: Will it work?
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Louisiana's Legislature passed a bill Friday to inject $45 million into an incentive fund for property insurers, which proponents say is an emergency measure needed to stabilize skyrocketing insurance rates that threaten long-term home ownership on and near the hurricane-ravaged coast.
Hurricanes Laura and Ida alone generated a combined 800,000 Louisiana insurance claims totaling $22 billion, causing eight insurance companies to fail and other companies to stop writing new business below Interstate 10.
The lack of availability from private insurers forced many homeowners to the state-sponsored Citizens, Louisiana's insurer of last resort, where they faced a 63% increase beginning Jan. 1.
Republican Louisiana Insurance Commissioner Jim Donelon, who convinced Democratic Gov. John Bel Edwards to call a Special Session and secured the support of Republican Senate President Page Cortez of Lafayette and Republican House Speaker Clay Schexnayder of Gonzales, warned people would lose their homes if action wasn't taken.
"Every day someone is telling me they're on the verge (of losing homes)," Donelon said during a committee hearing. "I truly believe if we don't do this thousands of homeowners will lose their homes - turn in their keys."
The commissioner said the bill is a "tourniquet" until long-term solutions can be implemented to fix the state's insurance crisis.
Donelon said at least seven companies have expressed interest in the program when it's funded, and he is confident the companies will be able to begin to depopulate Citizens, where the number of policies has quadrupled in two years.
Republican River Ridge Sen. Kirk Talbot, chairman of the Senate Insurance Committee, said the private companies' rates will be expensive, but more affordable than Citizens.
By law, Citizens' prices must be 10% above the highest market rate in each parish or the actuarial rate, whichever is higher.
"They will pay less than what they're paying with Citizens," Talbot said.
More:Should Louisiana issue $10,000 grants to homeowners to hurricane proof roofs?
Though the bill passed both the House and Senate with bipartisan, overwhelming margins, many lawmakers expressed reservations, questioning whether it will work as advertised by Donelon and whether the companies may come in for a fast money grab of taxpayer money without assurances that they wouldn't fail after another major storm.
"I'm really struggling with this," said Democratic Baton Rouge Sen. Regina Barrow.
Donelon said the program is a replica of the incentive fund that worked following Hurricanes Katrina and Rita with stronger safeguards for the state.
Greg Hilburn covers state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1
This article originally appeared on Lafayette Daily Advertiser: Louisiana passes 'tourniquet' to stop bleeding in insurance crisis
