BATON ROUGE, La. (AP) — A $45 million funding bill to address soaring homeowner insurance rates in hurricane-battered Louisiana is up for debate Friday in the state’s Senate.
If approved by lawmakers meeting in a special session, the measure, backed by Insurance Commissioner Jim Donelon, would fund an incentive program to provide grants to qualified insurance companies as an incentive to have them write policies in the state.
The bill was approved 90-8 by the House earlier in the special session that began Monday. Lawmakers hoped to end the session Friday. Approval of the bill in the Senate would likely be the legislation’s last major hurdle, although the House, which was set to meet later in the day, would have to approve any changes the Senate makes to the bill.
The state’s insurance crisis, similar to one in Florida, followed rough hurricane seasons in 2020 and 2021 when the state was hit by Delta, Laura, Zeta and Ida. Some companies went insolvent and others stopped writing policies in the state following a deluge of claims.
Lawmakers last year passed the incentive program but did not put any significant money behind it, hence the $45 million funding bill. Under the program, qualified companies will be awarded grants between $2 million and $10 million. In return, those insurers must provide 100% matching funds for the grant.
Donelon has said 10 insurers are interested in participating in the program, including seven already operating in Louisiana. While the commissioner said he can’t guarantee that the program will decrease premiums, he hopes it will “stabilize” the market.
He also said he hopes it will allow about 40,000 policyholders to leave the state’s insurer of last resort, Louisiana Citizens. The state-run safety-net insurance company, which is required to charge 10% above market prices, is about to boost its rates by 63%.
Louisiana Citizens has 120,000 residential policies. In 2021 it had 41,000 policies.