Louisiana insurance agents say companies need incentive fund; a state lawmaker isn’t convinced
NEW ORLEANS (WVUE) - Rep. Bryan Fontenot of Thibodaux says he is well aware of the pain his constituents are feeling as they face higher property insurance premiums or try to acquire insurance.
“I’m hearing that they’re drowning in premiums,” Fontenot said. “Not just them. I’ve got my own premium that I have to pay. Look, we live here like our constituents.”
But he is not on board with the agenda for an upcoming special legislative session that will have lawmakers consider whether to place $45 million into an incentive fund to help attract more insurers to Louisiana.
“I think, as a start, we should look at, ‘Did this program work after Katrina? What insurance came here? How many are still here? Have we had complaints on these companies?’ Or, how many have left, once they took taxpayer dollars? Did they depart the state after X-amount of years?” Fontenot said.
The Louisiana Department of Insurance said five insurers participated in the state’s post-Katrina/Rita incentive program and that their participation jump-started the market and helped attract about 30 more insurers over the next several years. Those additional insurance companies did not participate in the incentive program.
Insurance Commissioner Jim Donelon said last week that eight insurers in the state have failed in the aftermath of Hurricanes Laura, Delta, Zeta and Ida, and that many of the insurers who remain in Louisiana have stopped writing new policies. Donelon went on the House floor last week to urge legislators to consider the incentive fund in a special session.
Stephen Lovecchio, an insurance agent with TWFG Insurance, said the incentive fund is needed.
“Right now, we’re on life support,” he said. “So, whatever will get anybody in Louisiana today and at least help us through this hurricane season or ‘23 to get us through would be greatly appreciated.”
Fontenot said he thinks the state should explore helping insurers already doing business in the state.
“We certainly should look at those companies that are bound to the state of Louisiana -- like Farm Bureau of Louisiana, State Farm, Progressive, Allstate -- those people who have been here for years. They have serviced our citizens for years,” Fontenot said. “Should we ask (if) they could write more policies or should we subsidize them, prior to companies that have never done business in Louisiana?”
Donelon and insurance agents agree that rising reinsurance costs are contributing to the insurance crisis.
“The incentive money would actually step in and just give them some cushion, that if that reinsurance price comes back so high that they would have enough to pay it, basically,” Lovecchio said.
He thinks Louisiana should explore creating a catastrophe fund that could offer cheaper reinsurance coverage to insurers in the state.
“The private market might charge me 30 cents on the dollar, the state charges 15, so I save money,” said Lovecchio. “So, the insurance companies would pay the state of Louisiana a certain amount every year for a certain section of their reinsurance, so that reinsurance would actually stay in Louisiana, that money would stay in Louisiana.”
Fontenot was asked about that idea.
“I think it’s absolutely plausible. But the way that Jim Donelon and the governor set out this special session, we can’t look at that. That’s one of our issues,” he said.
Jeff Albright, CEO of the Independent Insurance Agents & Brokers of Louisiana, said in a statement, “IIABL believes that the Insure Louisiana Incentive Program will attract some coastal homeowners insurers to Louisiana and should be part of the solution to the property insurance crisis in Louisiana. In addition to the incentive program, the Louisiana legislature needs to improve the market environment in Louisiana to encourage more insurers to write business in our state.
“We do not believe that Louisiana can support a catastrophe fund. Annual homeowners premiums in Louisiana are only $2 billion. When major hurricanes hit our state, losses are tens of billions of dollars.”
Will Thibodaux ultimately support Donelon’s request with a vote for the incentive fund?
“Let me say this, the people of Louisiana are facing astronomical premiums, right?” he said. “We have to do something. And when you, as a legislator, are only given one option that could potentially help, then you got to highly consider it.”
See a spelling or grammar error in our story? Click Here to report it. Please include the headline.
Copyright 2023 WVUE. All rights reserved.