The week begins today when the Louisiana Legislature convenes for a seven-day special session on the state’s insurance crisis. Its main goal is to rein in capital expenditures that have grown after periods of crisis, but lawmakers say more needs to be done than what can happen in the near term. whole week.
The Gov. John Bel Edwards official call Sunday service begins at noon Jan. 30 and adjourned no later than 6 pm Feb. 5. The session’s call is very specific: to direct more state money to the Louisiana Department of Insurance incentive program.
Insurance Commissioner Jim Donelon has requested $45 million to help attract new insurers to the state, similar to the steps he took after hurricanes Katrina and Rita in 2005. Some Those companies have since pulled out of the Louisiana market or gone bankrupt.
The governor and councilors first informed Donelon that his request could wait until the regular meeting that starts on April 10. But the Commissioner of Insurance said that it is too long for the insurance companies, who need the money now, so that they can buy quickly for reinsurance, the policies included. their risks are also more expensive.
“Although Commissioner Donelon says we need to do this now, this is only the first step in solving Louisiana’s insurance issues after the 2020 hurricane season. and 2021, a disaster exacerbated by hurricanes and wildfires in other states in 2022,” Edwards said in a statement Sunday. “We will continue to work on this issue during the regular season starting in April.”
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Last week, it appeared that lawmakers agreed to wait until April to act. Some expressed doubt that Donelon’s approach would make insurance easier to find or cheaper.
“I think Commissioner Donelon thinks that the people down here are complaining about as many insurance companies as we were before, and they’re not,” said House Speaker Pro Tempore Magee, a Republican representing parts of Terrebonne Parish was hit hard. in the Ida Storm. “We want good insurance companies that will actually be partners here and pay claims and do everything they’re supposed to do.”
House Speaker Clay Schexnayder, R-French Settlement, asked last week if Donelon’s approach was effective. But by Sunday, his voice has changed a bit according to a quote he had in the governor’s speech to announce the special ceremony.
“While a special session to fund the Louisiana Incentive Fund will not solve the issue of the availability and affordability of property insurance for our citizens, a short-term Band-Aid can be a step first to a longer solution,” Schexnayder said, in part.
Senate President Page Cortez, R-Lafayette, pressed Donelon for more information about those who intend to use coercion. Donelon did not provide that information. In the governor’s speech on Sunday, Cortez said he understood why Donelon emphasized the need for a special ceremony because “time is very important”.
It was with the insurance commissioner an opportunity to galvanize politicians on Friday during the meeting of the Joint Committee on Budget Law.
“People are going to lose their homes if we don’t have a special event,” Donelon told the committee.
However, some members did not believe that the ceremony could be effective.
“I don’t want to go to a special session if you don’t have all the numbers to pass on both sides,” said Rep. Denise Marcelle, D-Baton Rouge.
How Florida handled its insurance crisis
Louisiana isn’t the only state where lawmakers have faced a property insurance crisis. The Florida State Legislature met in a special session in December where members faced an already weak market that was battered by Hurricane Jan last year.
At least eight failed insurance companies in Florida have gone bankrupt in the past three years, including five in 2022, according to the Florida Phoenix
Lawmakers agreed to increase Florida’s insurance funding with an additional $1 billion. That fund was created in May of last year and generated $2 billion.
In addition to the money, lawmakers have also introduced a provision that makes it harder for homeowners to hire a lawyer if they want to sue insurance companies. because of the poor and prompt payment of their claims.
“The court isn’t the problem — it’s the scapegoat,” said Ron Haynes of the Florida Justice Association, representing the plaintiffs’ attorneys, in a written statement.
Sponsors of the bill to add $1 billion to Florida’s insurance fund said it could take another 18 months before their action reaches four Reduced rates for homeowner’s policies. It also depends on the upcoming hurricane season to spare Florida from any major damage.
“We are in a dangerous position in terms of the property insurance market. As you know, we cannot choose the reality or the market we are in. We have to try to improve,” said Speaker of the House Paul Renner.
Trouble with Donelon’s plan
It takes at least five days to pass a bill in the legislative process, so lawmakers can’t use all seven days in the special session. Since the governor’s call is very narrow, it is not possible to consider another opinion during the convention.
But it does not guarantee an easy way to pass the additional $45 million in the budget. In fact, some politicians wanted a more general list to allow more solutions to be discussed.
According to the call, #beautiful will vote up or down on whether the Insurance Commissioner should provide funds to hire more insurance companies in the state as the only solution to the property insurance crisis in the state. No chance to give more ideas to solve the problem. pic.twitter.com/WaV66Zk2xT
– Thomas Pressly (@TAPressly) January 22, 2023
The recommendations include using the insurance money to help homeowners pay for additional policies from Louisiana Citizens Insurance Corp., the insurance company sponsored by the state. By law, Citizens must purchase its insurance above the market rate, and Donelon has refused any such assistance because it wants to eliminate the practices. based on Citizens.
Another idea offered is to give homeowners money from the fund to repair their roofs or make other changes to reduce their risk of the storm. These and other options have been determined for the traditional ceremony, based on information from Edwards, Cortez and Schexnayder.
But despite these hopes, regional and political differences could prevent the $45 million Donelon wants for the fundraising effort. Legislators in northern Louisiana, for example, may not be willing to provide state funds for a problem along the state’s coast.
Only a majority is needed to approve the $45 million share, but Donleon’s plan has received double scrutiny. The Rep. Sam Jenkins of Shreveport, the chairman of the House Democratic Caucus, told the Illuminator last week that he needed more information before he could support the insurance commissioner’s plan.
The chairman of the House Conservative Caucus, Jack McFarland, R-Jonesboro, said that Donelon not only wants to know the companies that may use the incentive, but also wants to question them. The insurance commission did not release the information, and the special session did not authorize such an investigation.
Senior reporter Julie O’Donoghue contributed to this report.