Some Louisiana lawmakers said they are not ready to fund a homeowners insurance reform program backed by Insurance Commissioner Jim Donelon, even if Gov. John Bel Edwards. call them to a special meeting in early February.
“I think the House is skeptical of everything,” House Speaker Pro Tempore Tanner Magee, R-Houma, said in an interview Wednesday. “There is absolutely no selling on what (Insurance Commissioner Jim Donelon) is proposing as a solution.”
Recently like last weekSenate President Page Cortez, R-Lafayette, and the Edwards administration said it is likely that lawmakers will be called into a special session in February to put $45 million into a stimulus fund for insurance companies. by Donelon. a solution to the state’s insurance deficit.
But in interviews on Wednesday and Thursday, many MPs said they were not ready to hand over the money at a special meeting in February – or also when the Legislature convenes for its regular meeting in April. They don’t believe that Donelon’s aggressive program will reduce the state’s insurance problems.
“I need more information before I sign off on that,” said House Democratic Caucus Chairman Sam Jenkins of Shreveport.
The state has seen many insurance companies go under or pull out of Louisiana after the 2020 and 2021 hurricane seasons. homeowners’ laws on the state’s insurance company, Louisiana Citizens Property Insurance Corp., and increased home prices.
In Louisiana’s coastal communities, property insurance costs may be close to or exceed the cost of home mortgages, said lawmakers who represent those areas.
To solve this problem, Donelon wants to implement an incentive program like the one he designed after hurricanes Katrina and Rita in 2005. Insurance companies are willing to write policies for better homes. the risk that they will receive government grants 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 in the private market.
Lawmakers first signed off on this request from Donelon during their 2022 legislative session, but they didn’t put any money behind it. Now the insurance commissioner wants $45 million to fund his idea, and many politicians have raised questions.
“Do we need help with insurance? Absolutely,” said House Speaker Clay Schexnayder, R-French Settlement. “But is this the right plan?”
Magee and a small group do not believe in the initial stimulus of Katrina and Rita, as Donelon has repeatedly said, and they question whether the same plan should be used again.
Although many insurance companies began writing policies after Katrina and Rita, it may have been because Louisiana had gone years without a major hurricane, not because of the incentives. offered, they said.
Some of the smaller companies in the Katrina and Rita insurance program were also created after Hurricane Ida, according to the Times-Picayune.
“I think Commissioner Donelon thinks that the people down here are complaining about as many bad insurance companies as we were before and they’re not,” said Magee, who represents communities in Terrebonne Parish were affected by Hurricane Ida. “We want good insurance companies that will actually be partners here and pay claims and do everything they’re supposed to do.”
According to Magee, the money may have an immediate impact if it is used directly to reduce the costs of Louisiana Citizens, where people must get insurance if they cannot get it on the private market. Sen. Bret Allain, R-Franklin, agreed and said he wants to see the state put $45 million into making Louisiana Citizens a better, long-term option.
“Half of these companies we couldn’t bring in and support,” Allain said. “I don’t know why don’t we use the money to support Citizens instead. We can have a sustainable product of the latter.”
Magee also said that it may be better to spend money on a program that allows people in parishes affected by storms to renovate their houses with more features to protect against storms, making them it is more attractive to private companies.
Legislators have also expressed interest in using Donelon’s stimulus money to encourage companies still operating in Louisiana to write more policies in more risky areas. They are not very interested in attracting new companies, which have not been tested in the market with public funds.
In an interview Wednesday, Donelon said the money could, and likely would, be spent on companies already operating in Louisiana. One company in Louisiana has even reached out to him about getting public assistance back for policies that have already been written.
Donelon said he would also make sure people who led insurance companies that failed in the past are not involved in companies that have opportunities in the future.
“None of those players participate in this incentive program funded by the state,” he said.
The collapse of the insurance market in Louisiana is not the only result of the big storms back in 2020 and 2021, argued Donelon. Some companies went under because they also operated in Florida where, in Donelon’s opinion, the state’s laws were too open.
But one of the politicians’ concerns about Donelon’s program is that they do not know what benefits the companies will receive from the $45 million he is requesting. According to Donelon, nine companies are interested in the financial aspect, but he did not reveal the names of these companies to the politicians.
Senate President Page Cortez, R-Lafayette, and Schexnayder said Thursday they want to know which specific companies are considering Donelon’s program.
Without that information, Schexnayder said that putting $45 million into the incentive fund would be the same as agreeing to buy a car without knowing anything about its manufacture or for example.
House Conservative Caucus Chairman Jack McFarland, R-Jonesboro, took it a step further, saying he not only wants to know who these companies are, but also wants in an opportunity to question them.
“I want to ask about the wages they will offer,” he said.
Not all politicians are skeptical of Donelon’s plan. Cortez said he likely would support the enforcement program, even if it’s just a “Band-Aid” to temporarily eliminate some of the homeowner’s insurance.
Governor John Bel Edwards did not express any doubt about Donelon’s request on the governor’s radio station on Wednesday. Edwards said he believes he and councilors are on the same page about supporting Donelon’s idea, although there was disagreement over whether a special meeting should be held.
Donelon is not only asking lawmakers to provide the $45 million, but he wants them to agree to provide the money sometime next month during a special session of the Council. Legislators.
The insurance commissioner said he needs the money quickly, before the Legislature convenes in April, so that companies that buy insurance – insurance for insurance companies – know what’s available to them this spring.
Donelon also said that the longer the state waits to establish the stimulus fund, the more families will face large increases. Louisiana Citizens fees increased 63% this year. Each month, more families will see those new price increases applied, he said.
But, it seems that Edwards will be asked to call the special session and it does not seem certain on Wednesday that it will be successful. He said there is a “difference of opinion emerging” between councilors on whether a special meeting should be convened.
Donelon will have at least one more opportunity to convince lawmakers of the need for his program and the special meeting. The honorable governor Lolo Matalasi Moliga is expected to speak before the Joint Committee of the Legislative Council on Friday of the Budget.