Legislature starts debate on crafting propety insurance lifelines

The state Legislature began a special session Monday aimed at ensuring residents have access to affordable property insurance after multiple hurricanes upended the market.

The gathering, which has to end by Feb. 5 at 6 p.m., was limited to ceremonial, opening day duties ahead of the first substantive debate on Tuesday.

A House committee is set to take up the key measure Tuesday that would allocate $45 million to a state incentive fund to entice insurance companies to write policies in Louisiana.

House Appropriations Committee Jerome "Zee" Zeringue, R-Houma, is the sponsor of the three-page proposal -- House Bill 1.

Zeringue's House district was among areas heavily damaged when Hurricane Ida roared ashore in August of 2021, one in a series in 2020 and 2021.

Under the plan, firms, would have to put up $1 for each dollar of state aid.

Backers say the move is a short-term fix until bigger changes can be debated during the 2023 regular session, which begins April 10.

Gov. John Bel Edwards called the special session on Jan. 22.

State Insurance Commissioner Jim Donelon has been calling for the gathering for months amid what he calls a crisis for homeowners unable to afford or obtain homeowners' insurance.

Edwards and legislative leaders were initially reluctant to meet before the regular session.

What changed, officials said, is the need for insurance firms to get reinsurance of their own before the regular session and ahead of the start of hurricane season on June 1.

Donelon said seven insurance companies have said they are interested in the incentive program.

Legislative headers hope to finish the special session on Friday.

The gathering costs taxpayers about $60,000 per day.

The session is aimed in part at easing pressure on the Citizens Property Insurance Corp., the state insurer of last resort.

Policyholders who rely on Citizens pay more than the market and rates shot up 63% on Jan. 1, according to a report released Monday by Legislative Auditor Mike Waguespack.

Waguespack said the hike would have been 31% if not for reinsurance costs -- what insurers pay to protect themselves in case of a surge in claims.

The report said insurance companies saw big profits for 14 of 18 years starting in 2004 -- 32.5 cents in losses for every $1 of premiums before reinsurance.

But the auditor said four of those years -- 2005, 2008, 2020 and 2021 -- showed losses of $4.40 for each $1 dollar of premiums for firms.

"The two-year period of 2020 and 2021, with consecutive years of significant disasters in different parts of the state, has placed an exceptional burden on the property insurance market," Waguespack said.

The review is meant to aid lawmakers as they begin their special session.

It says if the Legislature allocated $50 million to Citizens Property it could pave the way for the insurer to boost its reinsurance by up to $204 million or provide relief to policyolders.

Citizens has about 125,000 policyolders, which is roughly double the enrollment of normal times, experts say.

Check back with The Advocate for more details.