Louisiana is declaring a successful step towards revitalizing its homeowners’ insurance market after a rash of insurance companies had either entered insolvency or halted operations in the state due to a high volume of claims related to hurricane activity. Nine carriers have applied for grants totaling more than $62 million, $17 million more than the $45 million originally allocated to its incentive program.
“The application period was more than successful, and approved companies will soon begin offering competitively priced options to Louisiana home and business owners," said Louisiana Insurance Commissioner Jim Donelon.
"Along with several legislative proposals we will introduce to strengthen the market during Regular Session, these insurers will demonstrate to the wider industry that Louisiana is a viable destination to do business on a go-forward basis."
House Insurance Committee Chairman, Mike Huval, has agreed to file a bill during the upcoming regular session that will appropriate additional funding for the program to help meet the full amount each company has requested and is eligible to receive.
The turnout is likely to be seen as a positive sign, with property owners experiencing some of the highest premiums in the country.
Louisiana has been experiencing its most difficult property insurance market since 2005, when hurricanes Katrina and Rita caused colossal damage. Insured losses from the hurricane seasons of 2020 and 2021 have contributed to a mass exit of insurers in the state, while costs associated with inflation have also proved troublesome.
The Louisiana Department of Insurance (LDI) began reviewing applications as soon as they came in and will continue to do so over the forthcoming days, a press conference heard.
Due to strict standards put in place to receive a grant, there will most likely be several questions that each insurance company must address before they can be recommended for approval to the legislative committee, Donelon said.
Once the LDI has received approval from the Joint Legislative Committee on the budget, it will enter into cooperative endeavor agreements with the interested companies and issue grants accordingly.
If all goes well, the companies will be able to write policies as soon as next month, preparing residents of the states for hurricane season, which typically commences on June 1st.
Nine insurers have made applications to the Louisiana incentive program, seeking more than $62 million in total. They are:
The LDI recommended that policyholders do the following in order to ensure that they receive a policy is suited to their individual needs:
Donelon took this opportunity to announce that after 17 years in his current position, he will not be seeking re-election and will be retiring from his career in politics. At 78-years-old, Donelon is stepping down to “remove politics from the vitally important upcoming legislative session, where many significant issues that deal with the future of our state's property insurance market will be debated and hopefully decided to improve that market.
“I've spent almost 50 years serving. I want to enjoy the remaining years of my life with my family, and hopefully, some new hobbies.”
Louisiana Citizens, the state’s insurer of last resort, will provide an additional 30 days of support after insolvent United Property & Casualty Insurance Company’s (UPC) policies cancel on March 29 for policyholders and their insurance agents, allowing them to get coverage in the private market or bind a Citizens’ policy without losing coverage, it was announced earlier this week.
