Insurance companies would set their own rates under bill approved by Louisiana House

The Louisiana House approved a bill Thursday that would let insurance firms set their own rates without approval from the state's insurance commissioner — one of several controversial insurance proposals on deck as lawmakers try to mend the state's fractured marketplace.

House Bill 489 has the support of the powerful insurance lobby, which argues that paring back the commissioner's rate-setting abilities will grow competition and create a healthier market in which homeowners will have more options.

The bill notched a 56-23 majority vote in the House and moves now to the Senate.

Calls for more competition have animated much of the debate in the Republican-controlled Legislature about how to fix the insurance market, which sank into crisis following a series of punishing storms in two recent hurricane seasons. Bills aimed at wooing more insurers to the state have sailed through the Legislature in recent weeks.

"Thirty years ago, all 50 states approved insurance rates. Today, only 16 states do," said HB 489's sponsor, Rep. Mike Huval, R-Breaux Bridge. "A free and competitive insurance market will regulate prices much better than bureaucratic government regulation."

The bill would still let the commissioner strike down filings that are unfairly discriminatory or illegal, Huval said on the House floor.

But pro-consumer groups and Insurance Commissioner Jim Donelon said the measure would eliminate a key check on the insurance companies' power.

A letter penned by Consumer Federation of America lobbyists and circulated among lawmakers ahead of the vote Thursday voiced the pro-consumer group's "strong opposition" to the legislation. The resulting lack of oversight would drive rates up instead of down, the letter claims.

"I think we're really giving the insurance industry permission to write a blank check," said Rep. Matthew Willard, D-New Orleans.

The insurance crisis started in earnest with hurricanes Laura, Delta and Zeta's impacts on Southwest Louisiana in 2020, and deepened when Hurricane Ida struck the state the following year.

Over a dozen insurance companies went belly up under the ensuing mountain of claims, leaving over 100,000 households with no place to turn for insurance besides Louisiana Citizens Property Insurance Corp., the state's insurer of last resort. By law, Citizens must charge policyholders a higher rate than its privately operated peers.

Insurance policy has thus emerged as a focal point of the past two legislative sessions.

While some industry-supported insurance measures have faced a relatively easy path in the Legislature this session, another that drew controversy also involved the power of the commissioner — in this case, over the claims process.

That proposal, House Bill 604, would give the Louisiana Department of Insurance the authority to decide who can serve as an "umpire" — a third-party agent who can step in to make a final decision when homeowners and insurance companies can't agree on a claim amount.

Lawmakers balked at that prospect in a hearing last month, sending the bill's author, Rep. Ray Garofalo, R-Chalmette, back to the drawing board.