Louisiana, which has seen its fair share of insurance woes following a series of hurricane hits, has recently signed two bills into law that will help add some stability to a troubled property insurance market within the state.
Spearheaded by Governor John Bel Edwards, these bills are seen as an integral step in addressing uncertainty for consumers, insurers and brokers alike.
“I think brokers are seeing this as a positive development” said Jeff Albright (pictured), chief executive officer of the Independent Insurance Agents & Brokers of Louisiana. “Our primary concern was to make sure that any insurers that come in under the incentive program are monitored for financial solvency.”
The bills are safeguarded in legislation to ensure that financial solvency is being monitored while also including stress testing for reinsurance programs.
“We desperately need some market reform in Louisiana” Albright said, stressing the urgency for government reconciliation to ensure a robust insurance presence in the state. “The Department of Insurance has various companies who have already indicated that they want to participate in the incentive program and will deploy new capital to provide additional market capacity, and that's a very positive sign”.
While environmental aggressors including cataclysmic hurricanes are a primary reason that these bills have taken shape, there are other factors that have driven difficulties in the market and needed addressing.
“During the special session, as the funding of the incentive program was discussed, there was a lot of conversation about the need to address long term systemic issues” Albright said. This includes a slight deregulation of the insurance industry to give more flexibility for insurers to manage their businesses in Louisiana.
Another key component, as Albright noted, is looking “to improve the litigation environment in the state in order to encourage participation by insurers.”
With the unpredictability of hurricanes and other natural disasters that routinely cause destruction of varying degrees, it may be hard to predict how the industry can respond to the next, potentially catastrophic, event.
However, Albright stressed that “any property insurer that's writing business along the Gulf or Atlantic coasts understands that there's potential for hurricane losses.”
“I do think that some of the reforms that we're making will help to stabilize to some extent that marketplace in the event of a hurricane,” he said.
As Insurance Business previously reported, these bills, which were signed into law on February 7, are effectively known as HB1 and HB2 and are part of the Insure Louisiana Incentive Program. The former established a $45 million program designed to incentivize insurance companies into writing policies within the state. The latter cracks down on companies that have previously filed for bankruptcy from receiving the incentive.
State legislature at both the House and Senate level overwhelmingly agreed to pass the bills that were proposed during a special session at the end of January.
“The incentive program is only one part of our plan to protect our homeowners and our way of life from the ongoing crisis in the international insurance market. We will keep fighting for Louisiana homeowners, and this is a critical step.” #lalege https://t.co/w58Jc6E7HK
— LA Dept of Insurance (@LAInsuranceDept) February 8, 2023
The Louisiana Department of Insurance expressed optimism in the immediate benefits of this passage, and assured the general public that more will be added to the amendments in order to bring utmost security and coverage to people living within the state.
