BATON ROUGE, La. (BRPROUD) — Louisiana is in an insurance crisis and lawmakers are looking for answers on how to keep businesses and lower rates. On Friday, the insurance commissioner proposed a way to bring companies to come to the state.
During the legislative session, lawmakers created a fund to incentivize insurance companies to come to Louisiana, write new policies, and even consider bringing back some of the companies that left. But they didn’t put any money into it. Now the insurance commissioner presents a plan on how to fulfill it.
Since Hurricane Ida, seven insurance companies have pulled out of Louisiana and others have stopped writing new policies. More than 110,000 people remain on Citizens, the high-priced insurer of last resort, which recently asked the insurance department for a 63% rate hike.
The insurance commissioner has offered to use his department’s surplus millions of dollars to put into the incentive fund. The money comes from charging businesses for licenses, among other typical business costs.
“I hope to get permission from you and the governor to use this $20 million to create an incentive program like the one we had and used after Katrina and Rita,” the insurance commissioner said. Jim Donelon.
He hopes this will attract companies with cheaper premiums than future citizens and that they will have an agreement to stay for at least five years.
“For my money in this program, I’d rather 100% have to come from the citizens to benefit those 110,000 people first to benefit those paying through the nose,” Donelon said.
Excess money typically goes into the state’s general fund at the end of each year, which lawmakers did not favor removing during the regular legislative session. Donelon said as the insurance crisis worsened, the governor and legislative leaders supported the decision to transfer the money. Lawmakers have expressed concerns about prioritizing people leaving Citizens for more affordable plans.
Administration Commissioner Jay Dardenne said it was not a simple solution. There are some uncertainties as to what it takes to transfer the money and how long it will take.
“I’m not sure we have a way of identifying money right now that could be immediately converted. He can take measures in committee. It can take legislative action,” Dardenne said.
The insurance commissioner said he hoped this could be done without legislation as it would require an extraordinary session, which he said was unlikely, or wait for the 2023 ordinary session in April. He hopes to start the ball rolling to relieve policyholders earlier.