Louisiana Takes "Crucial Step" in Bolstering State's Insurance Market
Louisiana's ongoing insurance crisis reached a pivotal moment on Friday as lawmakers overwhelmingly approved a $45 million funding bill aimed at addressing rising homeowner insurance rates in the hurricane-ravaged state. The bill was passed with a 37-1 vote in the Senate, following a debate, and quickly received final approval from the House after a few Senate amendments were made.
The $45 million bill was passed with overwhelming support and will now be sent to Governor John Bel Edwards for his signature. The bill has been described as a crucial step in addressing Louisiana's ongoing insurance crisis, which was exacerbated by the severe hurricane seasons in 2020 and 2021 that saw the state hit by four devastating storms - Delta, Laura, Zeta, and Ida. The resulting claims saw some insurance companies go insolvent while others ceased writing policies in the state.
The bill was introduced in response to the urgent need for relief for the many families affected by the crisis. The incentive program will provide grants to qualified insurance companies as an incentive for them to write policies in the state. According to Edwards' office, the governor will sign the bill as soon as he officially receives it, which is expected to be as early as Monday.
The bill was supported by Insurance Commissioner Jim Donelon, who noted that the bill was a first step in addressing the state's ongoing insurance issues. Donelon said that he hopes the bill will help stabilize the insurance market, and that around 10 insurance companies, including seven currently operating in Louisiana, have expressed interest in participating in the program.
The bill was approved in the Senate by a vote of 37-1, with only Senator Barrow Peacock, a Bossier City Republican, voting against it. Peacock raised concerns about the repeated need for such expenditures, referring to similar measures that were taken following Hurricane Katrina in 2005.
However, Senator Kirk Talbot, the bill's sponsor and a River Ridge Republican, emphasized the critical need for the bill, stating that many families require relief and that the state has taken steps to prevent future insurance catastrophes, including the adoption of stronger building codes.
The bill was also approved by the House earlier in the special session, with a vote of 90-8. Donelon said that he cannot guarantee that the program will result in a decrease in premiums, but he hopes that it will help policyholders leave the state's insurer of last resort, Louisiana Citizens, which is required to charge 10% above market prices and is about to raise its rates by 63%. The state-run safety-net insurance company currently has 120,000 residential policies, with 41,000 policies in 2021.