2 Insurers Apply for Final Round of Louisiana Incentive Grants

Two insurance companies have applied for the final round of grants as part of a program aimed at getting more insurers to write policies in south Louisiana.

Four or five companies were expected to apply, but Insurance Commissioner Jim Donelon said that two applications failed to materialize before Tuesday’s deadline and one company’s application was rejected for not meeting the requirements for the Insure Louisiana Incentive Grant program.

The incentive program, approved by the Legislature last year, offers matching money to insurers who agree to take over policies now written by the state-backed Louisiana Citizens Insurance Corp.

Supporters of the program say it can lower property insurance rates by luring more companies to Louisiana and increasing competition. Five companies received the first round of grants issued in January.

Lawmakers set aside $100 million for the program. Based on the applications received the department expects to award just $39 million and return the remaining $61 million to the state, Donelon’s office said.

“I am incredibly pleased with the response. It is an overwhelming success,” Donelon said. “I think the program is so tightly drawn that companies did not feel that they had a reasonable chance of meeting the requirements, so they did not apply at all.”

Only established firms, with a net worth of $25 million or more, are eligible. Companies that win grants must write at least half of their net premium from property in the 37 storm-stricken federal Gulf Opportunity Zone parishes in Louisiana. In addition, 25 percent of their business must come from properties now insured by Louisiana Citizens and at least half of those policies must come from GO Zone parishes.

Donelon said he believes the incentive program has helped draw attention to Louisiana’s efforts to improve its insurance outlook by abolishing the Louisiana Insurance Rating Commission and establishing the statewide building code.

The companies that applied for the program are American Integrity Insurance Co. of Florida and Bankers Insurance Co.

American Integrity was formed in 2006 to take over policies from Florida Citizens Property Insurance Corp. It applied for a $5 million matching grant to start doing homeowners business in Louisiana.

Bankers has gotten an extension until March 18 to complete its application. The company applied for $5 million during the first round of applications in November, but was rejected because the insurance department said its Louisiana subsidiary was not sufficiently capitalized.

Bankers continues to argue that its Louisiana subsidiary, Bankers Specialty Insurance Co., is financially sound, Donelon said, but if the department is not persuaded Bankers Specialty has said that its parent company will put up a guarantee to meet the department’s concerns.

Donelon’s office will determine whether applicants qualify and how large their grants should be. The Legislature’s joint budget committee must approve all grant payments.

On the Net: Louisiana Department of Insurance: www.ldi.state.la.us