Plan to lure more insurers to Louisiana passes House, heads to Senate

BATON ROUGE – The House on Wednesday approved bills to spend up to $45 million to
encourage insurance companies to return to the state and to prevent firms that went bankrupt or
were declared insolvent from using the money.

The House Appropriations Committee approved the two bills Tuesday before sending them to
the House, where representatives questioned state Insurance Commissioner Jim Donelon about
the details of the program.

The funds would be used to reduce the financial risk for insurance companies that resumed
writing home and other property insurance policies in the state.

Donelon emphasized the urgency of the program for the 125,000 residents covered by the
state’s insurer of last resort, the Louisiana Citizens Property Insurance Corp, as well as for
those who cannot afford insurance at all.

Without the program, Donelon said, “Thousands of people are going to lose their homes.”

The bill now goes to the Senate, where the president, Sen. Page Cortez, R-Lafayette, has
voiced support for it.

Donelon looked back at the success that a similar incentive program had in the aftermath of
hurricanes Katrina and Rita in 2005.

Five companies participated then, and about a dozen others followed them back to the state.

“The insurance industry is bird-like in their movement,” Donelon said.

The commissioner ensured legislators that competition in the market would lower rates for
policyholders. But not all lawmakers seemed convinced.

“You’re much more confident than I am on that issue,” Rep. Lawrence “Larry” Frieman, R-Abita
Springs, said.

Legislators also worried the incentive fund would not provide long-term relief to policyholders.

Rep. Chad Brown, D-Plaquemine, strongly criticized the commissioner, saying the incentive
program was Donelon’s plan A, B, C and D.

“Did it really work last time? Or did we just get lucky?” Brown asked of the similar program
implemented after Katrina.

Brown is not the only member of his caucus unsure of the commissioner and his plan.

“Democrats are focused on helping struggling homeowners and rescuing our collapsing
insurance market,” said Rep. Sam Jenkins, chairman of the Democratic Caucus, in a statement
Monday. “But we must remember this crisis occurred on Commissioner Donelon’s watch.”

Jenkins said they must ensure the incentive fund is not a “cash grab for big insurance
companies.”

Still, some legislators think the plan they view as imperfect is better than nothing for the
thousands of coastal residents struggling to insure their homes.

“With reservation, I am going to support this bill,” Brown said, pointing to his coastal constituents
who are desperate for relief.

He said he hopes that if another storm hits next year, the companies will stay.

Rep. Timothy Kerner, R-Jefferson, whose own premium increased by $12,000, implied he also
has reservations about the bill but urged his colleagues to support it.

“This is not the perfect bill, but it is the only bill,” he said.