Louisiana Governor Kathleen Babineaux Blanco and state Commissioner of Insurance Jim Donelon on April 11 unveiled a joint legislative package designed to attract new insurers to the state, drive down rates and protect consumers, the governor’s office announced.
“While Louisiana is on the right road to recovery, we all know that journey will be short-lived if we do not have insurance to protect our new investments,” Governor Blanco said in announcing the proposal. “Property insurability is inextricably linked to the future of our state. Our legislative package is designed to balance the need to create a competitive regulatory environment while ensuring that our citizens have adequate consumer protections and can realize a benefit from strengthening their property. Increased competition in our insurance market will increase availability and affordability.”
In addition to Donelon, in announcing the proposal at the State Capitol Blanco was joined by representatives from the Coalition to Insure Louisiana, the Indepe-ndent Insurance Agents and Brokers of Louisiana, the Homebuilders Assoc-iation, Louisiana Realtors, and Louisiana Bankers Association.
Blanco said there are “five key insurance proposals in my legislative package.
“The first piece of legislation in my package creates a Consumer Bill of Rights. This legislation will clearly define the rights of consumers in their business transactions with insurance companies. People need to understand what is not covered, as much as what is.
“The second proposal provides for premium reductions for retrofitting. I believe it is fair to place a demand on the insurance companies to reduce premiums to the policyholders for reducing their risk of storm damages by complying with the new statewide building codes.
“The third proposal allows insurance companies to increase deductibles on a regional basis. Currently, if an insurer needs to raise deductibles to manage their risk in one part of the state, they must apply those deductibles statewide. This statutory change will allow insurance companies to apply different deductible ranges across the state to accommodate differences in risk. Increased deductibles should mean lower premiums for policy holders. …
“The last two measures in my package are designed to reduce the number of policyholders forced into Louisiana Citizens. The first measure would allow Citizens to bundle its policies for sale to private insurers. This gives insurance companies who want to enter the Louisiana market or expand their Louisiana business an opportunity to bid on an existing book of business.
“The second measure is two-fold — first, it helps us reach our goal of attracting at least 12 new companies (a Dynamic Dozen) and second, it depopulates Louisiana Citizens. This proposal creates an incentive program for property insurance companies. If a qualified insurer commits new capital to write property insurance policies in Louisiana, and agrees to take policies out of Louisiana Citizens, they would receive a grant matching their capital investment.”
Insurer support
The Property Casualty Insurers Association of America (PCI) released a statement expressing support for the plan.
“The members of the Property Casualty Insurers Association of America (PCI) share Gov. Kathleen Blanco’s and Insurance Commissioner Jim Donelon’s commitment to improving the state’s insurance marketplace, attracting new insurers and protecting consumers,” stated Greg LaCost, assistant vice president and regional manager for PCI.
“Specifically PCI supports replacing the Louisiana Insurance Rating Commission with a more competition-based regulatory system such as a ‘file and use’ rating system. Louisiana is the only state in the nation that still has a politically appointed rating commission with prior approval over insurance rates. We also support the governor’s proposal that would establish regional deductible ranges. Currently, insurance companies must apply deductible standards uniformly across the state, which creates a constraint since different regions of the state have different risk exposures.
“To help consumers protect their property we also support the establishment of a comprehensive hurricane damage mitigation program, which would create tax incentives for home and business owners who retrofit existing buildings to meet statewide building code standards.
“We also would support the requirement that carriers use actuarial data to reduce premiums for homes that are built stronger and safer. We will oppose efforts to use artificial and nonactuarial percentages as discounts however. If such happens, other consumers will end up subsidizing those new homes for as long as the new law exists.”
Louisiana’s legislative session begins April 30.
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