Louisiana Gov. Offers Property Insurance Revamp

In a statement, she said the legislative package is designed to "balance the need to create a competitive regulatory environment, while ensuring that our citizens have adequate consumer protections and can realize a benefit from strengthening their property. Increased competition in our insurance market will increase availability and affordability."

According to the two officials, they traveled the nation to study successful public policy models and lobby insurers, re-insurers and industry groups on behalf of Louisiana consumers.

Among the provisions in the legislation would be a Consumer Bill of Rights defining rights of consumers in their business transactions with insurance companies.

It calls for premium reductions for policyholders retrofitting or strengthening their homes.

The joint statement said this would put an expectation on the insurance company to extend a benefit to the policyholder for reducing their risk.

Their measures would also permit a range for deductible amounts on home coverage, depending on the region where the dwelling was located.

Under current regulations, if an insurer needs to raise deductibles to manage their risk in one part of the state, they must apply those deductibles statewide. The measure proposes to allow insurance companies to apply different deductible ranges across the state to accommodate differences in risk.

Citizens–the state's insurer of last resort–would be allowed under the legislation to bundle its policies for sale to private insurers, giving insurance companies that want to enter the Louisiana market or expand their Louisiana business an opportunity to bid on an existing book of business.

Another proposal would create an incentive program for property insurance companies. The officials said that if a qualified insurer committed new capital to write property insurance policies in Louisiana, and agreed to take policies out of Citizens, they would receive a grant matching their capital investment.

"These measures will make Louisiana's insurance market more attractive to companies and benefit our policyholders," Commissioner Donelon said.

A spokesperson for his department said it was not known at this time which legislator would introduct the measures.

Greg LaCost, assistant vice president and regional manager for the Property Casualty Insurers Association of America, called the legislative package is a positive step. He said PCI supports many of its elements and encourages the legislature to "seriously consider those elements that support the creation of a more competitive regulatory environment."

"Attracting new capital to the property insurance market is a key component in achieving success. By enacting greater regulatory flexibility, eliminating the rating commission and streamlining the regulatory process, Louisiana will be well on its way," said Mr. LaCost.

PCI, he said, backs replacing the Louisiana Insurance Rating Commission "with a more competition-based regulatory system, such as a 'file and use' rating system."

He noted that Louisiana is the only state that still has a politically appointed rating commission with prior approval over insurance rates.

PCI also supports proposals to establish regional deductible ranges and a comprehensive hurricane damage mitigation program, creating tax incentives for home- and business owners who retrofit existing buildings to meet statewide building code standards.

The group said it backs "the requirement that carriers use actuarial data to reduce premiums for homes that are built stronger and safer," but would oppose efforts to use artificial and nonactuarial percentages as discounts.

"If this happens, other consumers will end up subsidizing those new homes for as long as the new law exists," PCI said.