Editorial: Let's try free market approach to insurance — but don't leave consumers in the cold

If fixing Louisiana's property insurance crisis were easy, we would have done it already. That's the message state Senate President Cameron Henry, R-Metairie, delivered to a gathering sponsored by the Public Affairs Research Council recently.

He's got a point.

With that in mind, we offer qualified support for the reforms promoted by Insurance Commissioner Tim Temple, who argues that competition will best protect Louisiana property owners in the long run.

Temple's approach is difficult, to say the least. It boils down to this: Align our state's insurance code with those of other states by removing certain Louisiana-specific restrictions and regulations, then give the changes time to attract more insurers to our state. Over time, the ensuing competition will drive prices down.

In some ways, Temple's plan requires a leap of faith. Many Louisianans now pay more than they can afford for property coverage, either in the private market or through Citizens, the state-sponsored insurer of last resort. Removing some "consumer friendly" laws amid sky-high premiums sounds counterintuitive at best, but the current crisis shows no signs of abating despite those laws.

No one can guarantee that Temple's plan will work. If it doesn't, Temple has invited Louisianans to blame him, and we expect they will.

Temple and his allies make a persuasive case for mainstreaming our insurance code, particularly in light of Louisiana's geographic and environmental vulnerabilities and our history of undercapitalized insurers going under. The bills in Temple's package change some of the rules governing lawsuits against insurers and allow insurers more flexibility over whom they cover and what they can charge.

One high-profile measure, House Bill 611 by House Insurance Chair Gabe Firment, R-Pollock, would end Louisiana's unique three-year rule, which bars companies from dropping customers they've insured for three consecutive years. HB 611 would apply to all new policies written after Aug. 1, and after next Jan. 1, companies could nonrenew up to 5% of their policies — but not all in one parish.

We've supported the three-year rule in the past, on the premise that it protects consumers. But we also take Temple's point that it may actually keep companies away — and encourage those already here to drop customers after one or two years.

In a recent editorial board meeting, Senate Insurance Chair Kirk Talbot, R-River Ridge, listed measures the Legislature passed in recent years to give consumers a stronger hand in dealing with insurers during and after a disaster. We appreciate those steps and hope lawmakers won't support changes this year that tilt the legal scales against customers who feel they've not been treated fairly by their insurers.

We were disappointed that a House committee killed a bill to temporarily reduce the 10% premium surcharge for Citizens. Temple opposed the bill, arguing that it would deter competition. We think keeping the surcharge unfairly penalizes people with no private market options, and reducing it would offer at least some relief.

On another front, we hope all lawmakers get behind an idea that pretty much everyone agrees does work: helping more people put fortified roofs on their homes. To that end, we like Senate Bill 484 by Sen. Royce Duplessis, D-New Orleans, which would require insurers to give homeowners with fortified roofs a discount of at least 20%.

Lawmakers also should appropriate more than the $15 million now proposed for a grant program started last year to help more residents fortify their roofs. Both Senate President Henry and House Speaker Phillip DeVillier, R-Eunice, say they're open to spending more this time around.

They should make that a top budget priority. It would show homeowners across Louisiana that lawmakers are trying to help everyone, not just the insurance industry.