If Louisiana Gov. Kathleen Blanco is offering $100 million to insurance companies, then homeowners deserve a $93 million tax break on the premiums they’ve paid since the 2005 hurricanes, the Senate voted June 25.
Senators approved Blanco’s financial incentive plan, but it must return to the House because the bill is now in a vastly different form than when it passed the House. Along with the tax break, senators also approved new provisions that would give the Legislature oversight of the grants to insurers.
A handful of senators were skeptical about the central theory behind Blanco’s plan: that private insurers will start doing business in south Louisiana – writing policies for properties at high risk of hurricane damage – in exchange for grants from the state of up to $10 million.
“This is a $100 million giveaway to insurance companies,” said Sen. Rob Marionneaux, D-Livonia.
Called the “Insure Louisiana Incentive Program,” the plan was devised by the pro-business Louisiana Association of Business and Industry and championed by Insurance Commissioner Jim Donelon. Donelon has argued the grants will lure enough insurance companies to Louisiana that competition will rise and the cost of insurance will drop.
Sen. Walter Boasso, D-Arabi, amended the measure to add an income tax credit for the 2007 tax year for homeowners: they would get credit for a portion of their insurance premiums since 2005. Boasso said the tax credit would cost the state an estimated $93 million in lost revenue.
The Senate also approved an amendment that ties the plan to another bill, related to the state-backed Louisiana Citizens Insurance Corp., by Sen. James David Cain, R-Dry Creek. The amendment delays the issuance of the grants to insurers until Cain’s plan takes place: all policies now covered by Citizens must be offered at auction to private insurance companies.
The Blanco-Donelon plan would move forward if the state gets no reasonable offers for the Citizens policies.
The Senate also approved a bill by Rep. Jean-Paul Morrell, D-New Orleans, that could reduce rates for Citizens policyholders in coastal areas. The bill was amended by Sen. Nick Gautreaux, D-Meaux, to eliminate for homeowners in those parishes a mandatory 10 percent markup that all Citizens policies carry. Morrell’s bill also must return to the House for approval of changes.
House Bill 678 is at http://legis.state.la.us/.