Four things to know about Louisiana insurance crisis, plan to fix it

Louisiana homeowners from Lake Charles to Houma to New Orleans have seen their property insurance rates skyrocket since 2020 with a growing number being forced onto the rolls of state-sponsored insurer Citizens and many finding their insurance bills higher than their mortgage payments.

The growing crisis, caused by two devastating hurricanes, prompted Democratic Gov. John Bel Edwards to call the legislature into a special session following the pleas of Republican Insurance Commissioner Jim Donelon, who said: “People are literally going lose their homes” without one .

But as lawmakers gather to kick off the weeklong Special Session at noon today, their options for relief are limited to a single measure designed to entice more insurers to write new policies until the Legislature can formulate more long-term solutions during the Regular Session beginning April 10.

Here are four things to know about the special session and Louisiana’s insurance crisis:

How we got here

Louisiana homeowners have faced dramatic increases in insurance costs caused by the extensive damage caused by Hurricane Laura in 2020 and Hurricane Ida in 2021 if they can get coverage on the private market at all.

The reduced availability has driven tens of thousands of customers to the state-sponsored insurer of last resort, Citizens, which increased rates by more than 60% last year.

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 under Interstate 10.

The number of customers in Citizens has quadrupled in the last two years. By law, Burgers’ prices must be 10% above the highest market rate in each municipality or the actuarial rate, whichever is higher.

The Special Session Plan

Edwards drew very narrow parameters of what could be considered during the Special Session.

It is limited to a single bill that would implement a $45 million stimulus fund that uses budget surplus money to entice companies to write new policies and start depopulating Citizens.

Donelon told lawmakers and Edwards, who opted to wait until the regular session begins April 10 to address the crisis, that a delay would limit the program’s effectiveness because insurance companies must plan to buy their own insurance to fit new business before hurricane. season starts in June.

“Insurance Commissioner Jim Donelon emphasized that funding the Insure Louisiana Incentive Fund cannot wait until the Regular Session in April,” Edwards said in a statement.

Donelon conceded the stimulus program is a short-term solution to the immediate crisis, but more needs to be done during the Regular Session when there is more flexibility and time.

Will it work?

Donelon said 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, although he could not offer any guarantees.

A nearly identical program implemented after Hurricane Katrina did attract new companies, but some wary lawmakers noted that some of those insurers had shaky foundations and went belly-up over time.

“We’re being put in a box to allocate money as a Band-Aide instead of passing legislation to address the underlying problems,” said Jack McFarland, a Republican from Winnfield, the Conservative Caucus Chairman of said the House. “This idea of ​​an incentive has been done before, like after Hurricane Katrina. However, 40% of the insurance companies that took the Katrina money are no longer writing policies in Louisiana.”

Will it pass?

With Republican Senate President Page Cortez of Lafayette and Republican House Speaker Clay Schexnayder of Gonzales on board with Edwards to call the Special Session, the bill to fund the stimulus program is likely to pass.

But it’s not a slam dunk, especially in the House where some leaders, including some under I-10, have said they need to be convinced.

“As of right now, I’m a no,” said Republican Crowley Rep. House and Government Affairs Committee Chairman John Stefanski said. “I’m against just handing out taxpayer money to fly-by-night companies that will leave for the next hurricane.”

That’s why lawmakers like Republican Abita Springs Rep. Larry Frieman, a member of the House Insurance Committee, said they will work to add what they see as important protections to the bill.

“I’m not happy the (parameters) are written like this,” Frieman said. “I want to see some requirements added for companies that take the money.”

Greg Hilburn covers state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1