NEW ORLEANS (WVUE) – Many homeowners in Louisiana are nervously watching the tropics, still trying to navigate the state’s insurance crisis and unable to afford their coverage.
We’re learning more details about a plan in the works to offer more options for affordable coverage.
“It’s a win-win-win proposition,” Insurance Commissioner Jim Donelon said during a meeting of the State Budget Committee on Friday.
Donelon is working with State Senator Kirk Talbot and State Representative Mike Huval to revive a post-Katrina and Rita incentive program to create a more affordable and competitive marketplace.
“If the wheel worked then, hopefully the wheel will work again,” said Huval.
Huval was an insurance agent at the time and watched companies stop writing policies after the two great storms, taking Louisiana Citizens, the state’s insurer of last resort, to 174,000 policies by 2008.
Less than 10 years later it was 86,000.
Then Gov. Kathleen Blanco and Donelon set aside $100 million in matching money for companies to write new policies in the state.
Back then, not all of the aid went to Citizens policyholders.
“I’d rather if 100 percent had to come out of Citizens first to benefit those 110,000 people who are paying through their noses and calling me and saying if we get a 63 percent rate hike we’re going to lose our home.” said Donelon.
Donelon says he must agree to the increase if it is warranted.
Because of this, he wants to use $20 million in his office’s prospective earnings to restart this program.
After Katrina and Rita, the state paid $29 million to five companies in 2007.
One such company was the now bankrupt Southern Fidelity. Another didn’t deliver on the promised number he wanted to write over the required five-year period, so he had to return some of the money.
The total surplus of around $71 million was returned to the state.
Since the money Donelon wants to use this time goes to the State General Fund, Huval says they need to figure out the mechanism to make it available.
“Even though everyone is on board who wants to do it, there are certain things we need to do to get it right, so we’re working on that right now,” Huval said. “It’s not a challenge. It’s just another procedure we have to go through to make sure we can do this out of session.”
But Huval says they won’t wait.
“If the process allows us to do that before we go into the session, I can assure you that everyone I’ve spoken to is on board to try to do something good for the people who are.” need it,” said Huval.
One of the concerns raised at Friday’s meeting was to incentivize the companies that have already left us, rather than making it exclusive to the companies that have survived.
Donelon said the program is still being finalized so this requirement could certainly be added.
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