La. approves controversial changes to tackle insurance crisis | State politics

Governor Jeff Landry signed a series of bills Tuesday that would make it easier for insurance companies to drop policyholders, raise rates and have more time to pay claims after a storm, a controversial plan that aims to bring more businesses to the state to lure.

The package of bills comes amid an insurance crisis that has seen rates skyrocket after a dozen regional insurers went bankrupt and several larger insurers withdrew from the market. The dynamics of rising interest rates and fleeing insurers mirror those of other states most at risk of extreme weather due to climate change.

The bills Landry signed were pushed by Insurance Commissioner Tim Temple, a fellow Republican, and represent Republican leaders’ preferred strategy to make Louisiana more attractive to insurers. They say this will bring in more businesses, and more competition will stabilize or lower rates.

The Legislature appears poised to reject consumer groups’ attempts to mandate insurance discounts for certain policyholders. Republican lawmakers rejected one bill from Rep. Matthew Willard, D-New Orleans, to suspend the 10% surcharge paid by policyholders of Citizens, the state-backed insurer of last resort. Another bill from Sen. Royce Duplessis, another New Orleans Democrat, would have imposed bigger rebates for people who reinforce their roofs. It was watered down Tuesday, though advocates still hope it will bring relief.

Temple has been hesitant to promise that rates will fall as a result of its package, or to say when customers might feel the effects. An insurance executive recently said it will likely take two years for the effects to materialize, but the industry hopes the reinsurance market, a key cost driver, will view the changes positively. Temple has told lawmakers throughout the process to “blame me” if it doesn’t work.

Pledge to ‘rebalance’

Officials admitted at the signing of the bill on Tuesday that the strategy was unpopular. A poll commissioned by the Times-Picayune showed voters disapprove by a wide margin of one key bill in the package to eliminate the longstanding rule that insurers cannot drop policyholders after three years.

Landry, who has not made insurance a priority, emphasized that the package of bills was Temple’s idea. If this doesn’t lower interest rates, he said he is committed to bringing about more changes in the future.

“This package is a series of bills recommended to us by the insurance commissioner in hopes of getting rates lower,” Landry said. “If we don’t see these rates reduced, I know that all of these people and the commissioner are committed to continuing to work on this every step of the way to make sure we get it right.”

Temple, a former insurance executive, promised the bills would “rebalance” the property insurance market by making the state more attractive to insurers.

“Our hope is that this package of bills will create more balance in the law and in the marketplace so that we can reduce the cost of title insurance and make it more affordable for our citizens,” Landry said.

The package has drawn opposition from consumer and housing advocates, who worry that more homeowners will be dropped by the carriers at a time when rates are becoming increasingly unaffordable.

Andreanecia Morris, head of HousingNOLA, said her organization has delivered a petition to Landry asking him to veto the bills.

Morris said the Legislature should focus on lowering costs for citizens and building stronger homes to limit the growing risks of climate change, which is creating turmoil in insurance markets around the world.

“We don’t think this is nearly good enough to address this crisis,” Morris said, adding that the insurance industry was experiencing “corporate prosperity.”

Package signed

Landry signed four bills into law on Tuesday. One, from Willard, extends the state’s reinforced roof grant program, which was set to expire next year.

The other three are intended to make life easier for insurers. HB611, by Rep. Gabe Firment, R-Pollock, repeals the state’s unique “three-year rule,” which prohibited insurers from dropping policyholders or increasing their deductibles if they had been customers for three years. Companies will now be able to drop 5% of their regular customers per year, and much more if Temple agrees. The three-year rule no longer applies to customers who take out a policy after August of this year.

SB323 by Sen. Kirk Talbot, R-River Ridge, would overhaul the way claims are handled for homeowners insurers, giving them more time to pay and allowing a “recovery period” to resolve homeowner issues. The bill was a compromise with plaintiffs’ lawyers, which has long hampered GOP efforts to make it harder to sue insurers.

And SB295 by Sen. Heather Cloud, R-Turkey Creek, allows insurers to increase rates without prior approval from the Insurance Department.

Ben Riggs, head of the advocacy group Real Reform Louisiana, said Temple’s package is “anti-consumer” and “further stacks the deck in favor of big insurance companies.”

“Commissioner Tim Temple’s uncompromising, pro-industry legislative agenda has stripped away critical consumer protections, leaving Louisiana residents more vulnerable not only to storms, but also to the whims of major insurance companies,” he said.

Temple and the business lobby sought deeper changes to the laws governing how and when policyholders can sue insurers. Several bills, mainly related to auto insurance, were watered down or destroyed in the Senate.

Landry has suggested he is not in favor of such changes. The governor, who has received support from plaintiffs’ attorneys in his bid for governor, said Tuesday that he was angry in recent years as he saw homeowners who paid their premiums for years face long delays in getting their claims paid to get.

Homeowners have put insurance at the top of the priority list since rates skyrocketed in 2022 and 2023. The poll commissioned by The Advocate | The Times-Picayune found last month that this was the No. 2 issue for voters, who also gave poor marks to Temple and Landry’s handling of the crisis.