Louisiana Gov. John Bel Edwards called for a special session Sunday to address appropriate funds to the Insure Louisiana Incentive Fund, a fund created by lawmakers last year to attract more insurance companies to the state.
Edwards said the special session will convene at noon on Monday, January 30th and adjourn no later than 6 p.m. on Sunday, February 5th.
Louisiana Insurance Commissioner Jim Donelon last week outlined the Insure Louisiana Incentive Program to members of the state legislature.
The program will award grants of between $2 million and $10 million to each qualified company that applies and is permitted to participate. Those companies will provide 100 percent matching funds for the grant they receive, and the total new premium required to be written by each company is at least two times that total amount.
A company that receives a $5 million grant would ultimately be required to write at least $20 million in new premium, and at least half of that $20 million would have to be written in the 37 high-risk GO Zone parishes. Companies must stay on that coverage for a 5-year period and will earn 20 percent of the grant in each of those five years.
The participating companies will be subject to enhanced solvency monitoring including, but not limited to, newly increased capital and surplus requirements, monthly reporting, in-depth reinsurance program reviews and premium limits in each parish.
The purpose of the special session is to appropriate $45 million for the program.
“While Commissioner Donelon says we must do this now, this is just a first step in addressing Louisiana’s ongoing insurance issues after the devastating hurricane seasons of 2020 and 2021, a crisis worsened by hurricanes and wildfires in other states in 2022,” Edwards said. “We will continue to work on this issue during the regular session beginning in April.”
The special session comes as approximately 10,000 Louisiana Citizens policyholders are facing a 63 percent premium increase for residential policies and 76 percent for commercial policies. Donelon has said that reducing the number of policies in Citizens will reduce the insurer of last resort’s cost for its reinsurance program that renews on June 1.
House Speaker Clay Schexnayder said the special session to fund the incentive program is a “short term band-aid” that can lead to a more long term solution.
“The House will continue to work for a more permanent fix to this situation so that our businesses and property owners don’t have to go through this continuous cycle,” Schexnayder said. “We have to attract more companies to write policies in our state. We expect that Commissioner Donelon will make the incentive program work as a temporary fix, but we need to do more to solve the problem.”
This article was originally published by Insurance Journal. Reporter Ezra Amacher is the South Central U.S. News Editor of Insurance Journal.