(INDIANAPOLIS) June 29, 2007 – In one of the first moves of its kind, the Louisiana Legislature has adopted legislation to lure more insurance companies to hurricane-prone areas by offering financial incentives. In the final minutes of the 2007 session, lawmakers passed, as part of a package of bills, a compromise version of a $100 million grant program to attract insurers to the state. The package of bills, endorsed by Gov. Kathleen Blanco and Insurance Commissioner Jim Donelon, was to address the availability and affordability of private insurance following the 2005 hurricane season.
“The positive, proactive path taken by Governor Blanco and Commissioner Donelon to address Louisiana’s challenges is one less traveled by some states,” said Tami Stanton, central regional state affairs manager for the National Association of Mutual Insurance Companies (NAMIC). “This path, just as in the poem ‘The Road Not Taken,’ may make ‘all the difference’ in the future development of Louisiana’s insurance market.”
Part of the package of bills passed is HB 678, which will provide grants of up to $10 million to each insurance company that agrees to write new homeowners’ and commercial policies along the Louisiana coast. By attracting more private insurers, Blanco believes competition will force rates down for policyholders.
The purpose of the overall $100 million matching fund is to encourage insurers to do business in Louisiana and requires at least 25 percent of any new policies written to be for customers currently in the state-run Louisiana Citizens Property Insurance Corporation.
As amended in the Senate, the bill also offers homeowners $105 million in future tax credits to offset the cost of their insurance.
The Legislature also approved HB 960, another piece of the Blanco/Donelon package. This bill terminates the Louisiana Insurance Rating Commission and is one NAMIC also actively supported. Eliminating the last remaining rating commission in the country also sends a positive message to insurers.
The insurance commissioner will now have 45 days to approve or reject rates, or the rates go into effect.
A third piece of the Blanco/Donelon package approved by the Legislature is SB 205 that would create a consumer advocacy office within the insurance department by Oct. 1.
“Overall, given the issues unique to Louisiana, the Legislature balanced the needs of insurers and consumers,” Stanton said. “Governor Blanco and Commissioner Donelon charted a path and are to be commended for their foresight and leadership.”
However, not all the legislation coming out the session was supported by NAMIC. NAMIC is asking Blanco to veto SB 233 that would raise the minimum motor vehicle financial responsibility limits from 10-20-10 to 25-50-25. Current law requires car and truck owners to have minimum motor vehicle liability coverage, including $10,000 for damage of other people's property, $20,000 for injury or death to more than one person in an accident, and $10,000 for injury or death to one person. The bill would raise that minimum requirement to 25-50-25.
“Louisiana has some of the lowest limits currently, but, at the same time, has some of the highest auto insurance costs in the country, and this bill will only increase those costs,” Stanton said.
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Posted: Friday, June 29, 2007 12:00:00 AM. Modified: Friday, June 29, 2007 3:31:12 PM.
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