Louisiana's insurance market is in shambles. Here's how lawmakers hope to fix it

State officials, lawmakers and consumer advocates generally agree that the so-called Insure Louisiana Incentive Program is a solid step — but that it amounts to a temporary fix for an insurance landscape in disarray. A dozen insurers have gone belly-up, leaving well over 100,000 Louisiana households with no place to turn for insurance besides Citizens, the state's insurer of last resort.

The mounting frustrations of constituents navigating the resulting mess have created a sense of urgency among lawmakers to find more solutions. When the Legislature convenes on April 10, industry interests and advocates appear poised for bruising debates over the right fixes.

"I think we're at an inflection point, even more so than after Katrina," said Kevin Cunningham, a lobbyist who represents insurance companies.

Officials are floating a slew of proposals, with more likely to surface as the session nears.

Some appear to have broad support, like a pair of bills aimed at strengthening roofs — an effort proponents say would lower premiums. Another would let insurance companies adjust their rates more often, which some say would steady those companies' finances.

Others appear ripe for disagreement. For instance, Insurance Commissioner Jim Donelon is backing a proposal modeled after a Florida law that aims to reduce a spate of insurance-related litigation there. Detractors in the Sunshine State and Louisiana have slammed that law because it makes it more expensive and arduous for homeowners to sue their insurers.

Ben Riggs, director of the advocacy group Real Reform, accused the insurance lobby of "pushing Donelon to implement Florida's policies, which help insurance companies cheat policyholders" with that bill. Proponents said that before the law was passed, three-fourths of all insurance-related lawsuits in the U.S. were filed in Florida, and that something had to be done to stem the tide.

Homeowners caught up in the market's woes say stakes for the session are high.

Metairie resident Joe Srour ended up on Citizens' rolls when his insurer folded last year — about 18 months after a piece of a neighbor's chimney blew off a roof during Hurricane Ida and tore shingles from Srour's home.

"Do they have enough reinsurance? Do they cancel their reinsurance policies? Do they lower their standards? We don't know that," Srour said.

Roof grants

Lawmakers are coalescing around an idea launched in Alabama nearly a decade ago that allows residents to build and retrofit their homes to a more hurricane-resistant standard. Created by the Insurance Institute for Building Home Safety, the building standard known as Fortified is designed to withstand, in some cases, wind speeds above 100 mph.

Rep. Mike Huval, R-Breaux Bridge, who chairs the House Insurance Committee, said he plans to introduce a bill that would provide $10 million in funding to kick-start the grant program in Louisiana. Huval sponsored the bill that created the program last year, but it was passed too late to get funded, he said.

"It's been proven through homes that were (retrofitted) in Alabama that with a Fortified roof, the damage from strong hurricane winds is about 70% less," Huval said. "Basically, if you can keep the roof on top of a house, then you're not going to have a lot of damage to the house."

After nearly a decade, nearly 34,000 Alabama homes have been built or upgraded to the Fortified standard. But with more than half of its residents near a coast, Louisiana may have an even taller order to fill.

Huval said his bill will hew close to the provisions of Alabama's program, providing for grants between $2,000 to $10,000 for qualifying homeowners. People with fortified roofs should get a break on their insurance.

"I think there is such a concern for the high insurance rates in our state, that this is the solution," he said.

Another bill, filed by Rep. Gabe Firment, R-Pollock, would require insurance companies to offer policyholders the option to have their roofs rebuilt to fortified standards if they sustain storm damage — something policies in the current market don't always cover.

Donelon has also asked lawmakers to allocate another $17 million from a glut of unspent money into LDI's incentives pot — a measure that some lawmakers say should be accompanied by steps focused on helping policyholders directly, like fortifying roofs, said House Conservative Caucus Chair Rep. Jack McFarland.

"I'm not for giving more money (to the companies) unless we actually reform and change the way we manage our insurance," said McFarland, R-Winnfield. "All of it needs to work together."

Changing the rate filing period

Huval said he also plans to sponsor a bill that would allow insurers to request rate changes every six months as opposed to every year. He said the law could give companies more flexibility if there's a sudden change to their finances.

"This would give the insurance companies the ability to adjust their rates at least every six months for their rate filing. We feel that if we could pass this bill, it would attract some additional insurance carriers to our state."

The bill could change, he said.

Huval said it would be a small tradeoff for luring more insurers, which would result in better prices for consumers.

"It still has to be approved by the insurance commissioner," Huval said. "It's not a big difference in our minds, but to an insurance company, it gives them (another) opportunity to make a rate filing."

A bill modeled after contentious Florida law

At a town hall meeting this week sponsored by The Advocate | The Times-Picayune, Donelon said he is pushing for a law modeled after the one recently passed in Florida. In the Sunshine State, the legislation has scrambled party loyalties: While endorsed by business groups and Gov. Ron DeSantis, it drew a rebuke from former President Donald Trump, who called it "the worst Insurance Scam in the entire Country!"

A presentation outlining the Louisiana bill says it would do away with the practice of ordering insurers to award attorney fees to policyholders who prove the company hasn't paid claims fast enough. It would also require a judge to approve any effort to seek so-called "bad faith" penalties from companies — a step advocates such as Real Reform criticize as an unnecessary roadblock for policyholders.

But Donelon, who presided over the market meltdown and said recently that he will not seek re-election this fall, argued that Louisiana's bill would create market parity with other states.

Unlike Florida, Louisiana has not seen a high number of insurance lawsuits in recent years. But Donelon hopes the law will proactively stop a surge of potential legal action, which he said could scare away insurance companies.

"We're trying to prevent Louisiana from becoming the next Florida," Donelon said.

Firment, the north Louisiana legislator working on the roofing policy, has also filed two other insurance bills. One would let homeowners set up tax-exempt catastrophe savings accounts. The other proposes outlawing so-called "assignment of benefit" contracts, which shift the right to file claims away from policyholders to third parties, such as law firms.

These agreements have drawn scrutiny in recent months as a Texas firm faces accusations that it engaged in a pattern of questionable behavior, sometimes related to assignment of benefit contracts, in the fallout of Hurricane Laura.

Capitol News Bureau Editor Jessica Williams contributed to this report.