BATON ROUGE, La. (BRPROUD) — Louisiana is in an insurance crisis and lawmakers are searching for answers on how to keep companies and lower rates. On Friday, the Insurance Commissioner proposed a way to get companies to come to the state.
During the legislative session, lawmakers created a fund to incentivize insurance companies to come to Louisiana, write new policies, and to even look at getting some of the companies that left to return. But they didn’t put any money into it. Now the Insurance Commissioner is presenting a plan on how to fill it.
Since Hurricane Ida, seven insurance companies have pulled out of Louisiana and more have stopped writing new policies. Over 110,000 people are left on Citizens, the high-priced insurer of last resort, which recently asked the insurance department for a 63% rate hike.
The Insurance Commissioner proposed using the millions of dollars in excess from his department to put into the incentive fund. The money comes from charging companies for licenses among other typical costs of business.
“I hope to get the authority from you and the governor to utilize that $20 million to create an incentive program like the one we had in and utilized after Katrina and Rita,” Insurance Commissioner Jim Donelon said.
He hopes this will draw companies with cheaper premiums than Citizens to come and they’d have a deal to stay for at least five years.
“For my money in this program I would prefer that 100% has to come out of Citizens to benefit those 110,000 people first to benefit those who are paying through the nose,” Donelon said.
The excess money typically goes into the state general fund at the end of each year, which legislators were not in favor of removing in the regular legislative session. Donelon said as the insurance crisis grows, the governor and legislative leadership are supportive of the move to shift the money. Lawmakers voiced their concerns about prioritizing getting people off of Citizens to more affordable plans.
Commissioner of Administration Jay Dardenne said it is not a cut-and-dry solution. There are some uncertainties about what it takes to shift the money away and how long it will take.
“I’m not sure we have an avenue to go about identifying the money right now that could immediately be converted. It may take committee action. It may take some legislative action,” Dardenne said.
The Insurance Commissioner said he hopes it can be done without legislation because it would require a special session, which is unlikely he said, or waiting until the 2023 regular session in April. He is hoping to get the ball rolling to provide relief to policyholders sooner.