Outgoing Louisiana Insurance Commissioner Jim Donelon said that two initiatives to address the state’s property insurance market are meeting expectations.
Companies participating in the Insure Louisiana Incentive Program have collectively written more than 50,000 policies as of Nov. 30. Approximately 24,000 of those policies have been taken from or avoided going into Louisiana Citizens, the insurer of last resort, through the first eight months of the program, according to Louisiana Department of Insurance (LDI) data.
Incentive companies have tentatively selected over 50,000 policies for Citizens depopulation by mid-2024, LDI said.Lawmakers last year allocated $55 million in funding to the program. Insurers who participate in the program are required to write new property insurance in Louisiana with net written premiums of at least a ratio of $2 of premium for each $1 of the total of newly allocated property insurer capital combined with $1 of the grant from the Incentive Program Fund.
A grantee is awarded a $2,000,000 grant must write net property premiums of at least $8,000,000 in the first 24 months after receipt of the grant.
Most policies are going towards properties in southern Louisiana, as was intended. Through November, the top five parishes for new policies are Jefferson (8,923), Orleans (4,991), St. Tammany (4,429), Terrebonne (3,254) and Lafayette (3,237).
The incentive program is nearly identical to the one used in the aftermath of hurricanes Katrina and Rita. Donelon credits that program with restoring the Louisiana property market following those forms.
“It worked to depopulate Citizens by attracting a half dozen small companies, regional companies,” Donelon told Insurance Journal. “And then when they successfully wrote business, they attracted followers as so often happens in the insurance world being herd-like in their exiting tough markets and in their return to tough markets.”
Donelon also offered an update to the Louisiana Fortify Homes Program, which through November has accepted 3,000 applicants. The first 1,500 were required to be Citizens policyholders.
The program offers grant recipients up to $10,000 to restore their roofs to the Fortified standard as set by the Insurance Institute for Business & Home Safety. Insurers are required to provide discounts to homeowners who have Fortified roofs.
The average discount is about 20% off the total premium, as well as about a 24% discount for Citizens policyholders in coastal Louisiana, Donelon said.
A Fortified roof comes with a 7% increase in the appraised value of a home, Donelon said, citing a study from Guy Carpenter.
Donelon expects state lawmakers to allocate another $15 million towards Fortified roof grants in this year’s budget.
The $15 million would be generated by fees and licenses charged to insurers.
“”I firmly believe that if we build high enough and strong enough, we can live and work with 150 mph hurricanes making landfall on our coast from Grand Isle to Holly Beach,” Donelon said.
Donelon said incoming commissioner Tim Temple has expressed support for continuing to fund the program.
Temple, a native of DeRidder, was sworn in as commissioner on Jan. 8. Temple won election for the state’s top insurance official in October after his opponent dropped out of the primary. Temple replaces Jim Donelon, who had served as commissioner since 2006.
Temple worked more than two decades in the insurance industry. Temple served as president of Temptan, a family-owned investment management business in Baton Rouge. Additionally, he is a former Chair of the Louisiana Committee of 100 for Economic Development.
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