Friday, May 24, 2024

Louisiana insurance incentive program to provide $62M in grants

by BIZ Magazine

By Victor Skinner | The Center Square contributor

Nine companies are seeking $62 million in grant money through a recently funded Insure Louisiana Incentive Program designed to address the state’s insurance crisis, officials announced Tuesday.

Louisiana Insurance Commissioner Jim Donelon held a press conference with legislative leaders in Baton Rouge to provide an update on the incentive program, which lawmakers funded with $45 million during an extraordinary session last month.

The incentive program, first created in 2005 to address an insurance crisis following hurricanes Katrina and Rita, is designed to provide grants of between $2 million and $10 million to lure underwriters, which will be required to match the funds to write policies in the state.

Donelon said “the round one application period was more than the hoped for success” for the program, drawing requests from nine insurers seeking a total of $62 million in grant money.

Grant requests included three for $10 million each, with others for $6.5 million, $6 million, $5 million, and $2 million. If approved, the companies would be required to write a total of $180 million in new premiums and maintain that level for five years, Donelon said.

“We began the process (for approvals) as they were coming in,” he said. “If all goes well, they would be able to begin writing policies next month.”

Lawmakers are expected to introduce legislation to expand funding for the program to meet the $62 million in requests, but officials plan to distribute the $45 million on a pro-rata basis until the additional funding is secured, Donelon said.

The failure of numerous Louisiana property insurance companies has driven up the number of policies at Louisiana Citizens, the state’s insurer of last resort, from about 36,000 policies before Hurricane Laura in 2020 to about 125,000 policies. Louisiana Citizens is mandated by law to be the most expensive option, and the increase in policies has resulted in rate hikes of more than 60%.

“Literally, thousands of homeowners in our state are faced with losing their homes,” Donelon said.

Insurance officials estimate the incentive program could remove as many as 40,000 policies from Louisiana Citizens at the $45 million funding level, or as many as 55,000 policies at the requested $62 million level.

The incentive program is the “short-term fix” for the state’s insurance woes, but House Insurance Committee Chairman Rep. Mike Huval, R-Breaux Bridge, is also spearheading a more long-term solution.

Huval sponsored legislation last session to create a Louisiana Fortified Home grant program to defray the cost for homeowners to upgrade roofing to stronger materials. Funding for that program is among several long-term fixes for the program that are expected to be introduced in the coming legislative session that begins in April, he said.

“We will release more information on the full package soon,” Huval said.

The fortified home program is modeled after similar programs that have retrofitted over 35,000 roofs in Alabama and more than 6,000 in North Carolina, Donelon said.

In addition to the insurance update, Donelon, 78, also announced Tuesday he will not seek reelection next year. As the longest-serving insurance commissioner in Louisiana’s history, Donelon said he’s had little time to campaign while dealing with the insurance crisis, and would prefer to remove politics from the upcoming legislative session and spend more time with his family.

You may also like

Update Required Flash plugin