South La. Lawmakers Seek Rate Cut for Citizens Policyholders

By | March 31, 2008

South Louisiana lawmakers are pushing to give some homeowners a 10 percent break on their property insurance, though the legislation faces firm opposition from state Insurance Commissioner Jim Donelon.

The bill could erase the 10 percent markup paid by homeowners insured by the state’s “insurer of last resort,” Louisiana Citizens Property Insurance Corp., in 10 southern parishes. The parishes included are those intersected by – or entirely south of – Interstates 10 and 12.

Sen. Reggie Dupre, a co-sponsor, said private insurers have stopped writing new policies south of the interstates.

“That’s the line of demarcation where they don’t want to write new policies. So let’s make that the line for not charging the 10 percent,” said Dupre, D-Houma.

The price break would only kick in when it’s determined that the state-backed Citizens is writing more than 50 percent of new policies in a parish – a sign that true competition in that parish’s insurance market has dried up.

The bill will have to overcome a fight from Donelon, who unsuccessfully resisted a similar push last year – he fought legislation, now state law, that exempted homeowners in 11 southern parishes from the 10 percent hike.

Donelon said the state’s long-term goal should be to increase the number of private insurers writing policies in south Louisiana. That goal won’t be attained, he said, if the government-backed Citizens is in direct pricing competition with private insurance companies.

The measure puts Donelon in a tough political spot: he opposes it because it conflicts with his long-term plan fix for the region’s insurance problems, but doing so means he opposes a price break for voters.

“Needless to say, I don’t oppose that concept because I want to be unpopular,” said Donelon, a Republican elected to a four-year term last year. “I want to treat everybody the same, and I want to make the state insurance program the true market of last resort, not the second-to-last resort.”

Dupre said he expected a fight over the measure.

“I know that there’ll be a great deal of pushback from the insurance industry, and from Jim Donelon,” said Dupre, D-Houma. “I know Jim Donelon hates this bill.”

The eleven parishes already exempted from the markup, under last year’s legislation, are: Calcasieu, Cameron, Iberia, Jefferson, Lafourche, Orleans, Plaquemines, St. Bernard, St. Tammany, Terrebonne and Vermilion.

Under the right market conditions, the new legislation could also exempt Acadia, East Baton Rouge, Iberville, Jefferson Davis, Lafayette, Livingston, St. Martin, St. Mary, Tangipahoa and West Baton Rouge parishes.

The measure is co-sponsored by Rep. Sam Jones, D-Franklin, Joe Harrison, R-Labadieville, and Sen. Butch Gautreaux, D-Morgan City.

Jones is also sponsoring a related, but far narrower, bill – one that would exempt his home parish of St. Mary from the 10 percent Citizens markup. St. Mary is the only coastal parish that was not included in the exemption last year, and Jones said the parish has no private insurers writing new policies.

“Our people shouldn’t pay an inflated premium if there’s no alternative” to Citizens, he said.

On the Net:
Information about House Bills 213 and 302, and other legislation: http://legis.state.la.us/

Topics Legislation Louisiana

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