Commissioner Donelon released an update about the strategy to take the pressure off Citizens.
Louisiana Insurance Commissioner Jim Donelon recently held a news conference during which he released an update about the new incentive program in the state.
The announcement revealed that 9 insurers selling in the state have applied for the program.
The Louisiana insurance program announcement was a follow up to the $45 million funding bill state legislators passed to allow the Department of Insurance in the state to form an incentive program to draw more insurers to write property coverage there.
The state has experienced three catastrophic hurricane seasons, causing several insurers to go insolvent or simply withdraw from the state. As a result, thousands of residents had no choice but to seek coverage from the insurer of last resort, Citizens.
Of the 9 Louisiana insurance companies to apply for the program, eight are in the state and one is not.
In his announcement, Commissioner Donelon stated that once the application process is done, the applications will be sent to a board that will review them for approval to write policies in the state.
Each of the applicants applied for between $2 million and $10 million of program funding. The rules are the program state that insurers must match any amount they receive through the incentive fund.
For instance, a company receiving approval for $10 million in incentive funds would also need to match that amount with another $10 million so that it would have a total of $20 million for policies.
Furthermore, the program also requires insurers to write twice as many policies. Therefore, if a comparable company had $20 million in funding in place for policies, it would be required to write 40,000 Louisiana insurance policies in order to comply with the incentive program. Moreover, those policies would need to be honored for five years in total, said Donelon.
In his announcement the commissioner also explained that his goal was to reallocate funds toward the incentive fund so that it would be able to reach its original $62 million goal. When the legislature approved the incentive program, it gave approval for only $45 million in funding.