Legislators addressed Monday a dramatic rate increase for hurricane protection insurance on some policies backed by the semi-public Louisiana Citizens Property Insurance Corp.
Legislators approved, in the waning moments of the 2012 session, a change of wording that addresses some issues that led to a 58 percent average statewide increase for wind-and-hail only policies, which generally cover hurricane damage. But premiums in 14 coastal parishes doubled or more when Citizens rate increase went into effect last Friday.
“This does not address the ‘wind-and-hail only’ issue,” said state Sen. Dan “Blade” Morrish, R-Jennings, on whose measure the change was added. “It will eventually address the price.”
“It was all we could do to get this much out,” said state Rep. Sam Jones, D-Franklin, who helped the changes to Morrish’s legislation. “This was the last bill going through that we could attach this to.”
Legislative rules require that amendments relate to the subject of the bill to which they are added. Other bills that dealt with insurance this session already had passed through the process, he said.
Senate Bill 204 would include Louisiana Citizens Property Insurance Corporation among the entities exempt from furnishing bonds in judicial proceedings. The amendment during a conference committee convened to work out differences in wording between the House and the Senate added a paragraph.
Citizens is required by law to calculate its rates on either the market rate, the amount charged by private insurance companies that sell at least 2 percent of the policies in a given parish, or the actuarial sound rate, the amount that would cover expected losses and expenses. But in several parishes, no private companies offer wind-only policies.
The wording added to SB204 would lift the 10 percent requirement in parishes where no private companies sell hurricane insurance. Additionally, Citizens would start reviewing its operations in search of ways to reduce rates, if possible.
“The law expects that review to begin immediately,” Morrish said.
The Legislature also approved House Concurrent Resolution 189, which “urges and requests” the commissioner of Insurance to phase in the 2012 premium increase over a four-year period. The increase became effective June 1.
Insurance Commissioner Jim Donelon said he does not have the power to set aside state law, which requires Citizens to adjust its rates each year.