EDITORIAL: After incentive fund, fortified roofs next step

Feb. 8—State lawmakers took an important first step toward addressing Louisiana's long-term insurance crisis in the special session that ended Feb. 3. They reconstituted the state's insurance incentive program, first created after Hurricane Katrina, by injecting $45 million into a special fund designed to entice insurers to write more property and casualty policies in our state.

Insurance Commissioner Jim Donelon, the leading proponent of the incentive program, said after the session concluded that matching grants of $2 million to $10 million will soon be available to qualifying insurance companies already licensed in Louisiana as well as those willing to become licensed here. To qualify for the grants, insurers will have to meet strict financial, reporting and solvency standards as well as other requirements.

That's an encouraging first step, but it's by no means a silver bullet. Lawmakers will have to do much more in the regular session that begins April 10, and in future sessions, to give Louisiana homeowners and businesses long-term relief from skyrocketing premiums.

Let's start by recognizing what the incentive program can and cannot do. In the short term, Donelon says, it should help take 40,000 or so property owners out of Louisiana Citizens, the state-backed insurer of last resort whose rates are, by law, higher than those charged by market-based insurers. Over the next five years, barring more record-breaking weather disasters, the fund should continue to shrink the Citizens pool and, by increasing competition in the private market, help bring premiums down.

While that's a good start, history has taught us that it's not enough.

The next big step, says Donelon, is for Louisiana to toughen state building codes below Interstate 10 and Interstate 12 to require "fortified" roofs on all new construction — and to implement an aggressive program of grants and tax credits designed to get property owners to fortify roofs on existing structures.

Fortified roofs are specifically designed to prevent damage that commonly occurs during high winds, hurricanes, hailstorms, severe thunderstorms and even tornadoes up to EF-2. Insurers offer significantly lower premiums to customers with fortified roofing certificates, but retrofitting existing roofs to meet fortified standards isn't cheap.

Offering incentives and tax breaks directly to property owners is the only way to make fortified roofing a standard in south Louisiana, says Donelon. That's not a new concept. Alabama has implemented such a program, and it learned through trial and error that most property owners need help covering the cost of replacing entire roofs, not just the cost of structural retrofits.

"You can't really do a fortified roof properly on an existing structure without putting on a new roof," Donelon said. "If we give grants just to cover the cost of a [structural] retrofit, that's not enough" for homeowners who will need to replace existing roofs. Donelon said funding for a fortified roofing program will be "the most important thing in next legislative session."

If lawmakers want to take serious, long-term action to address Louisiana's insurance crisis, they will have to raise building standards and decide what level of grants or assistance Louisiana can afford to provide to help property owners meet those higher standards. Lawmakers already passed a bill last year to provide grants for structural retrofits, but Alabama's experience showed that more is needed to create widespread premium relief.

"The most important thing in the next session will be funding for fortified roofing," Donelon predicted. He added that "climate and resiliency" issues also will challenge lawmakers for years to come.

We hope lawmakers are up to that challenge.

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