$45 million insurance incentive plan approved by Legislature to end special session

A measure meant to rein in skyrocketing homeowners insurance rates after multiple hurricanes upended the market won final approval Friday in the Legislature, ending a five-day special session.

The Senate backed the bill 37-1. Shortly afterwards, the House voted 90-8 to go along with changes made by the Senate, sending the measure to Gov. John Bel Edwards, who called the special session and is expected to sign the bill.

Under the plan, the state will put $45 million into an incentive fund designed to lure insurance companies into the state, giving homeowners more affordable options.

"The bill is going to make a significant difference for the people of Louisiana to buy affordable insurance," said House Appropriations Committee Chair Jerome "Zee" Zeringue, R-Houma and sponsor of the bill.

Multiple firms failed or fled Louisiana after hurricanes Laura, Delta, Zeta and Ida did catastrophic damage in 2020 and 2021.

The legislation is largely aimed at trimming the number of policyholders forced onto the rolls of the Citizens Property Insurance Corp., a state-run operation that serves as a last resort to homeowners unable to get policies elsewhere.

Those policies have to be 10% above market prices, and rates are shooting up 63% this year.

State Insurance Commissioner Jim Donelon said he thinks the legislation -- House Bill 1 -- will allow 40,000 of Citizens' 125,000 policyholders to obtain coverage through private firms.

In a statement, Edwards praised the work of the Legislature.

"This appropriation into the Insure Louisiana Incentive Fund will only partially address the current crisis by bringing more insurers into our market, limiting premium increases by fostering competition and reducing the number of Citizens policies and the attendant risks of statewide assessments to address the impact of future catastrophic weather events," Edwards said.

The special session, which had to end by Sunday at 6 p.m., was finished in the minimum number of days for a bill to clear both chambers.

A Senate committee on Thursday stripped two of the three amendments added to the House version, then restored two of those three changes during Senate debate Friday.

The third amendment, which required that insurance firms use at least 25% of their grant money to policyholders formerly on Citizens, will be enacted through a state rulemaking process.

Edwards called together lawmakers in part to allow insurance companies time before hurricane season to get reinsurance of their own, which is needed in case of an inordinate number of claims after a natural disaster.

Senate Insurance Committee Chairman Kirk Talbot, R-River Ridge, who handled the bill in the Senate, rebutted charges that the session stemmed from Donelon's failure to ensure that insurance companies were on solid financial footing.

Talbot said Donelon's department followed accepted standards but some of the hurricanes that struck defied models on what insurance companies needed to do to stay solvent.

Sen. Sharon Hewitt, R-Slidell, urged senators to back the measure.

"But our work is definitely not done and we have to commit to coming back and addressing these insurance issues within our control in the next legislative session so Louisiana is a place where insurance companies want to work," said Hewitt, who is running for governor.

The regular session starts April 10 and is expected to include a heavy dose of insurance bills.

The law passed Friday will allow the state to issue grants of between $2 million and $10 million to insurance companies.

Firms will be required to provide matching funds for each dollar of state aid.

Donelon said 10 companies have said they are interested in the program.

Officials said they hope to begin allocating grants by the end of March.

The Senate also passed a second bill that would ban grant funds going to insurance companies whose officers have been involved in previous bankruptcies or insolvencies.

The vote was 38-0 for House Bill 2 by Rep. John Stefanski, R-Crowley, sending the measure to the governor since it passed the House on Wednesday.

On the main measure, House Bill 1, the lone "no" vote in the Senate was cast by Sen. Barrow Peacock, R-Shreveport.

The "no" votes in the House were cast by Reps. Larry Frieman, R-Abita Springs; Barry Ivey, R-Central; Edmond Jordan, D-Baton Rouge; Sherman Mack, R-Albany; Danny McCormick, R-Oil City; Scott McKnight, R-Baton Rouge; Nicholas Muscarello, R-Hammond and Thomas Pressly, R-Shreveport.

Those missing the vote were Reps. Kenny Cox, D-Natchitoches; Foy Gadberry, R-West Monroe; Paul Hollis, R-Covington; Jason Hughes, D-New Orleans; Wayne McMahen, R-Minden and Alan Seabaugh, R-Shreveport.