5 April 2023Analysis

Reform package unveiled for Louisiana insurance market

The Louisiana Department of Insurance (LDI) has unveiled a suite of comprehensive reforms to Louisiana’s insurance market to stabilise rates for homeowners and build long-term sustainability.

Insurance Commissioner Jim Donelon, Senate Insurance Committee Chair Kirk Talbot and House Insurance Committee Chair Mike Huval announced the legislative package, which includes legal reforms, strong incentive programs for homeowners and insurers, and a significant investment in roofing.

The trio said the package represents tested policies that directly respond to what they described as the insurance crisis in the state.

“This package, which is centred around legal reform and the Fortify Homes roof grant program, is the most ambitious property insurance reform we have attempted to achieve in my 17 years as Insurance Commissioner,” said Donelon. “The first step in our recovery is well underway. You’ve seen the news: our state leaders pulled together in February to fund the Insure Louisiana Incentive Program, which has already received eight approved applications from insurers for $42 million in grants. That means more lower-cost insurance options for homeowners. I anticipate we will see 40,000 policies come out of Citizens, the high-cost insurance program of last resort, by the end of the program’s first year and 50,000 additional new policies written during that time.”

“Through the work of our committees and the LDI, the Insure Louisiana incentive program is attracting significant interest from insurers. This is a big win for homeowners across the state who will see more options and opportunities to exit Citizens,” said Talbot. “We’re prepared to move forward with additional incentives to attract nearly $250 million of new written premium, meaning tens of thousands of rate reductions for Louisiana homeowners.”

The legislative package includes a full implementation of the Louisiana Fortify Homes Program, which helps homeowners receive direct incentives to build stronger roofs, which in turn will lower their insurance premiums.

The LDI, in partnership with insurance leaders in the legislature and stakeholders throughout Louisiana, is also proposing legal and claims process reform that it hopes will attract more insurers from across the country to Louisiana’s market and stabilise costs for homeowners.

“We’ve seen rogue law firms file frivolous lawsuits against insurance companies, which drives up costs for honest homeowners and makes it harder for legitimate claims to be processed,” said Donelon. “Louisianans know bogus lawsuits on top of more frequent and destructive disasters means insurance companies don’t want to do business here, and if they do, they’re charging an arm and a leg.”

The LDI is also pushing to strengthen regulations on insurance company leadership by blocking former officers and directors of failed insurers from jumping to new companies. The Legislative session begins on April 10, 2023.