As the new government takes office, lawmakers will be tasked with tackling the insurance crisis. The new insurance commissioner already has ideas about things he wants to change, but some advocates are concerned about some of the ideas he has in mind.
Insurance Commissioner-elect Tim Temple is putting together a group of industry leaders to figure out how the state can lower the cost of homeowners insurance. The group is made up of people who work in the auto, home, life and commercial insurance industries. He hopes they can begin to address the key issues for the industry that can be changed by the commissioner or the legislature.
“We only have a handful of companies willing to write homeowners insurance in the state of Louisiana. We want to encourage those companies to come back,” Temple said. “And if you go and tell somebody, ‘Come to Louisiana, write business, and I will let you know when you can raise your rates. You have to kind of put that into perspective.”
Temple says Louisiana needs to start regulating like surrounding states. For example, he’s in favour of changing the three-year rule that makes it harder for a company to drop a policy. This has come up in the past, but often hits a snag with lawmakers who represent coastal districts.
“The senators and representatives are standing up for their constituents who don’t want to make it easier for insurance companies to delay and deny claims,” said Ben Riggs, executive director of Real Reform Louisiana. “They don’t want to make it easier for the insurance companies to kick them off their books and force them onto the citizens, where they will suffer an immediate and immediate price increase.”
Temple said he understood the concern, but was open to finding alternatives to the law without scrapping it altogether.
“I’m not suggesting that you just get rid of it. I think that would create more, that would create more short-term turmoil in the marketplace if we just ripped off that Band-Aid,” Temple said.
Consumer advocates say it’s still going to hurt homeowners to change these rules. Policyholders have already seen big increases in premiums and fear it could be harder to get a payout from their company when they need it.
“Insurance companies are not standing on Louisiana’s border ready and willing to take on the risks that come with these big storms to take advantage of these small regulatory changes,” Riggs said.
He believes the state needs to work on risk mitigation to reduce the extensive damage from increasingly dangerous and frequent storms that target Louisiana.
“We have to mitigate the risk. The elevated roof program, for example, is one way to mitigate that risk,” Riggs said.
Temple is not convinced that the fortified roof programme should continue indefinitely, but would like to see a tax credit for people who take the initiative to fortify their homes.
He is open to a number of ideas to address the insurance crisis. He is in favour of a special session to deal with a few selected schemes. Temple is still waiting for Governor-elect Jeff Landry to give the go-ahead for the session. If it is to take place, he would like it to be in January so that any changes can be made well before the start of next year’s hurricane season.
