Louisiana Insurance Commissioner Jim Donelon says he hasdeclined State Farm's request for a regional deductible plan.

“The proposal submitted by State Farm failed to meet therequirements set forth by law,” Donelon says in a statement.

The plan State Farm submitted “neither illustrates the company'sintent to write new business nor denotes how the plan is in thebest interest of policyholders,” he adds.

Legislation passed in 2008 in Louisiana allows insurers to askthe commissioner for permission to use mandatory storm deductiblesin specific parishes—increasing the storm deductible in a parish byup to 4 percent of the insured value of the home. In exchange, thehomeowner pays a lower premium.

Storm deductibles are triggered after wind and hail, a tropicalstorm or a hurricane.

State Farm was the first insurer to attempt to take advantage ofthe law, Donelon says.

State Farm spokesman Gary Stephenson relays the followingstatement via email: “We are disappointed that our request toimplement revised deductibles in some coastal parishes was turneddown. It is necessary for any business to be able to managelosses and find a proper balance between risk and premium resourcesto protect those risks. Finding such balance is vital to ensuringour ability to continue, longterm, to provide protection not onlyfor our coastal customers, but also to our customers throughout thestate.

The vulnerability of the coast, and cost of damaging storms onthe coast is well known, and we must address that.”

Prior to the law, an insurer couldn't increase a deductible on apolicy that had been in effect for more than three years unless thecompany did on all policies statewide. This remains the case inLouisiana since no insurer in the four years since the legislationwas enacted has successfully received the go-ahead for a regionalstorm deductible plan.

“It would be unfair to ask our customers in northern Louisianaor another state to pay for the risk-cost along the coast,”Stephenson continues. “It is important that we find ways forcustomers in each region to be responsible for the risks of theirparticular area.”

To be approved to implement a regional deductible plan, insurersmust met 10 criteria, including a plan to write new business whereit will increase the deductible.

In a letter denial State Farm's request, the LouisianaDepartment of Insurance says State Farm “clearly denoted that it isthe company's intent to not write any new business” where it wantedto increase the deductible.

State Farm failed to meet 7 or the 10 criteria, Donelonsays.

State Farms says it will continue to work with the insurancedepartment to “find appropriate solutions to the challenges we facetogether.”