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Louisiana Insurance Commissioner Prepared to Make His Case for Homeowner Relief in Special Session

Louisiana – Louisiana Insurance Commissioner Jim Donelon has presented a plan to stabilize homeowners insurance costs for Louisiana residents by funding a program called the Insure Louisiana Incentive Program, which was approved by state lawmakers in 2022, but has yet to be funded. The program aims to provide insurers with matching grants in order to write new policies in Louisiana, modeled after a successful program established in the aftermath of hurricanes Katrina and Rita in 2005.

On January 26, 2023, Louisiana Insurance Commissioner Jim Donelon announced that he is prepared to make his case and work with the legislature to provide relief to homeowners during the special session, which is set to begin Monday. Earlier this month, Donelon presented his plan to the governor and legislators, which centered on funding a program that would eventually stabilize homeowners insurance costs for Louisiana residents.

The Insure Louisiana Incentive Program was unanimously approved by state lawmakers during the 2022 Legislative Session, but it has yet to be funded. The incentive program is intended to provide insurers with matching grants in order to write new policies in Louisiana. It is modeled after the successful program established in the aftermath of hurricanes Katrina and Rita in 2005 to ensure homeowners could obtain affordable insurance.

“It is critical that we fund this program, which will save Louisianans money on their homeowner’s insurance,” said Donelon. “I’ve spoken to too many of our state’s residents and business owners, struggling to make ends meet, who are now seeing skyrocketing insurance costs. Some are facing being priced out of their homes. My number one priority is stopping that from happening and keeping people in their homes.”

Because of external market conditions and a recent series of record-breaking, destructive storms that increased the cost of doing business for Louisiana insurers, Louisiana is experiencing the worst homeowners insurance market since hurricanes Katrina and Rita.

Louisiana Governor Edwards, at the urging of Donelon, called for an extraordinary session of the legislature to convene and appropriate funds for the incentive program. It will begin at noon on Monday, January 30, and end by 6 p.m. on February 5th.

“We were successful in creating the incentive program last year, and the legislature must quickly fund it so we can attract more insurance companies, stabilize costs for consumers, and bottom line, keep people in their homes,” said Donelon.

Donelon called the special session rather than the regular session in April, claiming that time is of the essence. If the legislature appropriates funds for the incentive program, Donelon’s department can distribute them to qualified companies as early as March, allowing them to access the reinsurance they need to take on thousands of new policies ahead of hurricane season.

“Plain and simple, this plan is aimed at giving Louisiana residents more options for affordable, quality insurance as soon as possible,” said Donelon.

Once funded, the incentive program will drive the depopulation of Louisiana Citizens, the state-mandated insurer of last resort, which is more expensive than private property insurance companies. Reducing the number of policies in Citizens will lower the cost of Citizens’ reinsurance program, which renews on June 1st, the first day of hurricane season, and will reduce Citizens’ next rate increase to pay for additional reinsurance.

Donelon’s proposal would provide grants ranging from $2 million to $10 million to each qualified company that was approved to participate in the incentive program. Those companies will provide 100% matching funds for the grant they receive, and the new premium required by each company will be at least twice the total amount.

“This program proved successful after Katrina, creating savings for policyholders every month for nearly two decades until hurricanes Ida and Laura hit,” said Donelon. “We’re going to repeat that proven success and propose new, sustainable solutions to ensure people can protect their property and afford to live and prosper in Louisiana for generations to come.”

Donelon is looking forward to the regular session, where he will advocate for long-term solutions to the state’s insurance challenges, in addition to funding the incentive program during the special session. His plans include expanding and strengthening the programs he successfully championed to improve the insurance claims process and strengthen the state’s market, such as one that will provide grants to homeowners to replace or retrofit their roofs to high standards, lowering insurance rates by strengthening roofs against future hurricanes.

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