Louisiana Insurance Commissioner Jim Donelon met resistance from lawmakers on Friday as he presented them in a special session in February to fund an insurance stimulus program aimed at controlling homeowners’ costs.
“People are going to lose their homes if we don’t have a special meeting,” Donelon said during the Legislature’s Joint Budget Session at the state Capitol.
But some lawmakers weren’t entirely convinced by Donelon’s urgent appeal. They expressed doubt that a special session was needed in February. Some were also not happy with Donelon’s special program.
“I’m not sure,” said the Chairman of the House Finance Committee, Jerome Zeringue, R-Houma, when asked if he supports the special session.
“I don’t want to go to a special session if you don’t have all the numbers to pass both sides,” said Rep. C. Denise Marcelle, D-Baton Rouge, questioned whether Donelon could rally more lawmakers. to vote for his program.
Louisiana has seen Many insurance companies go down or leave Louisiana after the state collapsed during the 2020 and 2021 hurricane season. The market crash is dumping many homeowners policies on the state’s insurance company, Louisiana Citizens Property Insurance Corp., and increased home prices.
As homeowners face rising insurance premiums, Donelon wants to implement an incentive program similar to the one he put in place after hurricanes Katrina and Rita. in 2005. Insurance companies willing to write policies for higher-risk properties will receive government subsidies to help cover their costs. The goal is to divert policies away from Louisiana Citizens, who are required by law to pay more for their insurance than the private market for competition
Lawmakers unanimously approved the plan for Donelon’s insurance incentive program last year, but did not allocate money for it. The commissioner now wants to call a special council meeting to put $45 million into the fund.
According to the insurance commissioner, the $45 million increase cannot wait until the regular council meeting begins in April. Insurance companies that want to participate in the program are currently discussing the purchase of reinsurance – it is very insurance for insurance companies. They will not be able to do more policies in Louisiana later this year if they did not buy reinsurance this spring to pay for the additional business.
Donelon told lawmakers that approving the $45 million transfer “sooner rather than later” could also save thousands of families from seeing the increase. most of their house payments in the next three months by bringing insurance companies into the first program. However, many politicians do not seem to believe that the return of money two months ago will save their constituencies from price increases because no companies have pledged to participate in the program. .
Sen. Fred Mills, R-Parks, asked Donelon to provide an estimate of the insurance savings that individual homeowners can expect to receive as a result of the $45 million bond. . Donelon said he wasn’t sure his staff could make such a comparison.
“I don’t know how to do that,” replied the commissioner, later adding, “I’ll try.”
Some politicians also wondered if the program presented by Donelon would achieve their main goal – to remove thousands of insurance policies from Louisiana Citizens and put them in the private market.
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When lawmakers approved the constitution of the insurance program last year, they announced the regulation that insurance companies receiving money from the stimulus fund, must use policies from Louisiana Citizens. Donelon wanted to include the Louisiana Citizens requirement, he said, but the chairman of the Insurance Committee of the Senate Kirk Talbot, R-River Bridge, removed it during the legislation.
From a technical point of view, Donelon said that he expects that insurance companies will continue to pursue families with Louisiana Citizens policies – whether necessary or not – because those policies are the most expensive. But the lack of certainty seemed to frustrate lawmakers.
“There is no guarantee that a single Citizens policy will be eliminated if we pass this program,” said Senate President Page Cortez, R-Lafayette.
Lawmakers also questioned whether Donelon was open to another solution, which would include giving more money to Louisiana Citizens than to private insurance companies. Donelon pushed back against this proposal, which he said would lead to a large state insurance program that the state could not afford.
“I strongly urge you not to go down that road,” he said.
Some of the private companies that took public money after hurricanes Katrina and Rita eventually went up or out of Louisiana. Others may have stayed but were no longer willing to cover property in hurricane-prone areas. Lawmakers don’t want to see that happen again, where they invest in companies that end up abandoning their constituencies.
The Insurance Commissioner seemed confused by the pushback from lawmakers, especially after they unanimously voted to set the stage for the incentive program last year. .
“The truth is, I didn’t think there would be any hesitation on the part of the legislature to fund what they did unanimously,” said Donelon.
Currently, there is no other option to deal with insurance problems on the table. The lawmakers asked Donelon what would happen if they didn’t put $45 million into the stimulus program as requested. He replied that he was not sure what he was going to do.
“I don’t have an immediate plan B,” Donelon said.
At the end of the week or at the beginning of next week, it is expected that the governor John Bel Edwards will make an announcement, whether the special ceremony will be held. The Honorable Member of Parliament requires at least 7 days’ notice before convening, which means that the convention will not start the week of January 30 in the morning.
The leader of the Legislature said that the session should be at least five days, because it is at least that long to move a bill before the House and the Senate. .