Donelon, some lawmakers hopeful about a special legislative session on insurance crisis

NEW ORLEANS (WVUE) – Louisiana remains in the grips of an insurance crisis, after some insurers failed financially and others fled the state after catastrophic Hurricanes Laura and Ida. Now, there is a push for lawmakers to return to the state capitol soon to address the problem.

Insurance Commissioner Jim Donelon said Tuesday (Jan. 17) he has spoken with political leaders about calling a legislative special session that would focus on approving an incentives package designed to lure insurers to the state.

“The money that we’re asking (is) $45 million out of the billion dollar-plus surplus,” Donelon said.

Rep. Kyle Green (D-Marrero), a member of the House Insurance Committee, said he favors holding a special session.

“If we don’t take action, it’s going to create a housing crisis, particularly (for) those who live south of I-10,” Green said. “I think it’s prudent that the leaders — the commissioner of insurance, the governor and elected legislative leaders — are looking at calling us back in. I think it’s needed.”

A meeting is expected this week between the governor and leaders of the legislature.

In the wake of major storms, insurers have been reluctant to write new wind and hail coverage. Some companies have bailed from the state, leaving Louisiana Citizens — the state’s insurer of last resort — bloated with more than 125,000 policyholders who had no place else to turn for coverage.

“Unfortunately, those folks are now experiencing a 63 percent rate increase on their renewal of Citizens’ policies, beginning this month,” Donelon said.

Coverage through Citizens is usually more expensive, and that is by design.

“By statute, it has to be 10 percent higher,” Green said. “And for many of our citizens, 10 percent higher than the market — which is already high, in and of itself — can price you out of owning a home. I’m fearful of the prospect of having a housing crisis.”

Donelon said he knows property owners affected by the topsy-turvy insurance market and rising premiums are frustrated.

“That’s playing out all across America, but I will admit that it’s worse in our state than any other state,” he said. “And that’s because of our vulnerability to hurricanes.”

Still, there are some insurers signaling they are interested in writing new coverage in Louisiana. But Donelon would not identify them.

“I’m not ready to comment on who’s going to do what,” Donelon said. “Some of those companies are seeking licensure from us as the regulator, and I am not ready to comment on the likelihood of that happening.”

However, Donelon said half of those companies already are operating in Louisiana.

“I will add that we have about eight companies that have expressed interest of taking on policies in our state, in particular, in the anticipation of the incentive program being funded,” Donelon said.

He said they are interested in assuming thousands of the policies Citizens currently has.

“It’s probably now about 30,000 policies that have been asked to be removed from Citizens. But agents have the right of refusal on those policies before they’re transferred out of Citizens,” Donelon said.

The governor’s office did not immediately respond to Fox 8′s questions about this week’s meeting and the potential for a special legislative session.

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