Two Louisiana lawmakers said they support a plan to overhaul the state-backed insurance company by opening much of its business to bidding among private firms.
Sen. James David Cain, chairman of the Senate Insurance Committee, and Sen. Ken Hollis, chairman of the Senate Committee on Commerce, said they’ll file a bill that would award the high-risk homeowners policies, now carried mainly by the state-backed Louisiana Citizens Property Insurance Corp., to the best bidder.
Some of the state’s actual and projected $2 billion surplus could be used to subsidize the program, Hollis said, at least in its first years.
Missouri adopted a low-bid program for its workers’ compensation program in 1994 that was costing businesses annual 25 percent premium increases, said Hollis, an insurance executive. Workers’ comp rates in that state have since leveled off.
Hollis said he would like to see a bill requiring the low-bidding company be awarded a three-year contract to carry the high-risk coastal Louisiana homeowners policies.
Cain said a part of the bill also will include a provision reworking the 15-member Citizens board to reduce how much influence of the insurance industry has on the company. Under existing law, the industry is guaranteed a majority of at least eight of the board’s 15 seats, and could have as many as 11 seats, because the governor is required to appoint members from certain sectors.
Cain, R-Dry Creek, said gubernatorial appointees should instead cover a wider spectrum of interests, including accountants, retired judges and consumer advocates.
Hollis said details need to be worked out: “This is just in the beginning stages.”
He said the bill’s purpose will be to help reduce homeowners insurance rates or reduce or eliminate the annual assessment on homeowners policies to pay off the $1 billion in bonds.
“Citizens is not doing the job,” said Hollis, R-Metairie. “It is only going to get worse.”
Insurance Commissioner Jim Donelon has not spoken to Hollis or Cain about their plan, but said he was unimpressed with the idea.
“I think the proposal raises more questions than it answers,” Donelon said. “Putting together a program for workers’ compensation is totally different than putting together a proposal for wind exposure … Nothing I heard offers much hope of fixing the problem.”
Information from: The Times-Picayune, www.timespicayune.com.