Legislature approves $45M in funding in effort to draw insurers to state

(File photo)

A $45 million funding bill to address soaring homeowner insurance rates in hurricane-battered Louisiana was overwhelmingly approved by Louisiana lawmakers today and sent to Gov. John Bel Edwards for his signature.

The Senate approved the House-passed bill 37-1 after a debate this afternoon. It then went back to the House for quick final approval of Senate amendments, bringing a close to a five-day special session Edwards called at the urging of Insurance Commissioner Jim Donelon.

The measure, backed by Donelon, will fund an incentive program to provide grants to qualified insurance companies as an incentive to have them write policies in the state. Edwards’ office says he will sign the bill when he officially receives it—possibly as early as Monday.

Sen. Barrow Peacock, a Bossier City Republican, cast the only vote against the bill in the Senate. He noted similar expenditures following Hurricane Katrina in 2005 and questioned whether the vulnerable state should let the free market take care of the situation.

“Are we going to have to do this every time we have several storms hit our state in a two- to three-year period?” Peacock asked the bill’s Senate sponsor, River Ridge Republican Kirk Talbot.

Talbot said the bill is badly needed by many families and that Louisiana has moved to avert future insurance catastrophes, including with the adoption of stronger building codes.

“We need to pass this bill and get relief to people who need it,” Talbot said.

The bill was approved 90-8 by the House earlier in the special session.

Gov. John Bel Edwards, a Democrat, had called the session at the urging of Donelon.

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 says he can’t guarantee that the program will decrease premiums, he hopes it will stabilize the market.

He also 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.