Insurance Commissioner Jim Donelon made his case to state lawmakers on why a special session is needed next month to address the big decline in private insurance companies willing to provide property coverage. Donelon wants to give insurance companies a financial incentive to write policies in coastal areas.
“The sole purpose of my ask for a special session is to appropriate $45 million to fund that incentive program,” said Donelon.
Donelon said a similar incentive program used after 2005's hurricanes Katrina and Rita decreased the number of homeowners who needed coverage from Citizens Insurance, a state-run property insurer more expensive than private insurance.
There are some lawmakers who prefer waiting until the regular legislative session to create the incentive fund, but Donelon said that just delays the time many homeowners will be subject to high rates in order to be covered by Citizens.
“If we do not do this in a special session those folks will incur three more months at a minimum of paying that 63% rate increase,” said Donelon.
House Speaker Clay Schexnayder is skeptical of Donelon’s plan, he said there’s no guarantee this will result in new or more private insurance companies taking on more policies.
“You don’t have a letter saying yes we’ll come in and we’ll do 50 policies, or we’ll come in and do 100 policies, it’s a maybe,” said Schexnayder.
Donelon didn’t name the companies, but he said there are seven private insurers anxious to take advantage of the state’s incentive program.
During the joint budget legislative committee meeting, House Appropriations Chairman Jerome Zeringue questioned whether it would be better if they put the $45 million to help policyholders who have Citizens.
“Or making it cheaper like maybe taking the $45 million and getting Citizens to do reinsurance or investing in getting buildings and working on building codes and things that will work on here in Louisiana. The Louisiana Fortify Home Program or something like that with Citizens,” said Zeringue.
A decision on whether to hold a special session in early February will need to be made soon.