Several Louisiana legislators say they are not yet prepared to fund a homeowners insurance incentive program backed by Insurance Commissioner Jim Donelon, even if Gov. John Bel Edwards calls them into a special session in early February.
“I think the House is skeptical of everything,” House Speaker Pro Tempore Tanner Magee, R-Houma, said in an interview Wednesday. “There is just no buy-in on what [Insurance Commissioner Jim Donelon] is proposing as being a solution.”
As recently as last week, Senate President Page Cortez, R-Lafayette, and the Edwards administration said it was likely that lawmakers would convene in a February special session to put $45 million into an incentive fund for insurance companies that Donelon is touting as a fix to the state’s insurance crisis.
But in interviews Wednesday and Thursday, many legislators said they weren’t prepared to transfer that money in a February special session—or even when the Legislature convenes for its regular session in April. They are not convinced Donelon’s incentive program would alleviate the state’s insurance problems.
“I need more information before I sign off on that,” says House Democratic Caucus chair Sam Jenkins of Shreveport.
The state has seen several insurance companies go under or pull out of Louisiana after being walloped during the 2020 and 2021 hurricane seasons. The collapse of the market is dumping more homeowners’ policies on the state’s insurer of last resort, Louisiana Citizens Property Insurance Corp., and driving up housing costs. In communities along Louisiana’s coast, property insurance premiums may now come close to or exceed the cost of home mortgages, say legislators who represent those areas.
To address this crisis, Donelon wants to implement an incentive program similar to one put in place after hurricanes Katrina and Rita in 2005. Insurance companies willing to write policies for higher-risk properties would receive public grants to help cover their costs. The goal is to divert policies from Louisiana Citizens, which is required by law to price its coverage higher than the private market.
Lawmakers initially signed off on this proposal from Donelon during their 2022 legislative session, but they didn’t put any money behind it. Now the insurance commissioner wants $45 million to fund his idea, and more legislators are raising questions.
“Do we need help with insurance? Absolutely,” House Speaker Clay Schexnayder, R-French Settlement, says. “But is this the right plan?”
Magee and a handful of others aren’t convinced the initial Katrina and Rita incentive fund was successful, as Donelon has repeatedly claimed, and they question whether that same strategy should be used again.
While more insurance companies began writing policies in the aftermath of Katrina and Rita, it could have been because Louisiana went several years without a major storm, not necessarily because of the incentives offered, they say.
Some of the smaller firms in that Katrina and Rita insurance program also went belly up after Hurricane Ida, according to The Times-Picayune.
“I think Commissioner Donelon thinks that people down here are clamoring for a bunch of s— insurance companies like we had before and we’re not,” says Magee, who represents communities in Terrebonne Parish affected by Hurricane Ida. “We want good insurance companies that are actually going to be partners here and pay claims and do all the things they were supposed to do.”
Magee suggests the money might have more immediate effect if it was used directly to lower premiums in Louisiana Citizens, where people have to get insurance coverage if they can’t find it on the private market. Sen. Bret Allain, R-Franklin, agrees and says he would prefer to see the state put $45 million into making Louisiana Citizens a better, long-term option.
“Half of these companies defaulted that we brought in and propped up,” Allain says. “I don’t know why we don’t use the money to prop up Citizens instead. We could have a sustainable product of last resort.”
Donelon will have at least one more chance to convince lawmakers of the need for his program and the special session. He’s scheduled to speak before the Legislature’s Joint Legislative Committee on the Budget today. Read the full story from Louisiana Illuminator.