Louisiana Democratic Governor John Bel Edwards has called for a special session of the state legislature to address the growing property insurance crisis in the state, with a focus on implementing a $45 million incentive fund to attract companies to write new policies. The week-long session will convene at noon on January 30th and must adjourn no later than 6 p.m. on February 5th.
The state has been facing a property insurance crisis in recent months, as homeowners have faced dramatic insurance cost increases triggered by the vast damage caused by Hurricane Laura in 2020 and Hurricane Ida in 2021. Many homeowners have found it difficult or impossible to find coverage on the private market, with reduced availability driving tens of thousands of customers to the state-sponsored insurer of last resort, Citizens. Last year, Citizens increased rates by more than 60%.
Republican Insurance Commissioner Jim Donelon has been lobbying hard for either the governor or legislature to call the special session to fund the program. On Friday, he addressed the Joint Budget Committee, saying, "People are literally going to lose their houses if we don't have a Special Session." He added that at least seven new insurers have told him they are interested in entering the market through the incentive program if it is funded and implemented.
The commissioner said that the program will help reduce Citizens' rolls. He also pointed out that a delay in addressing the crisis would limit the effectiveness of the program because insurance companies need to plan for buying their own insurance to match new business before hurricane season begins in June.
"Insurance Commissioner Jim Donelon has stressed that funding the Insure Louisiana Incentive Fund cannot wait until the Regular Session in April," Edwards said in a statement. He added that while the incentive program is a short-term solution to the immediate crisis, more must be done during the Regular Session when there is more flexibility and time. "We will continue to work on this issue during the Regular Session beginning in April."
Hurricanes Laura and Ida generated a combined 800,000 insurance claims totaling $22 billion, causing eight insurance companies to fail and other companies to stop writing new business below Interstate 10. The number of customers in Citizens has quadrupled during the past two years. By law, Citizens' prices must be 10% above the highest market rate in each parish or the actuarial rate, whichever is higher.
It is clear that the state of Louisiana is facing a critical situation with regards to property insurance, and the special session called by Governor Edwards is an important step in addressing this crisis. With the support of Insurance Commissioner Donelon and the potential participation of new insurers, the state has the opportunity to take action and provide relief for homeowners who have been struggling to find affordable coverage. It is crucial that the legislature works together to find a long-term solution to this ongoing issue and provide peace of mind to the people of Louisiana.
Comments