top of page
  • Writer's pictureStaff @ LPR

Louisiana House bill may allow insurance companies to drop 5% of policyholders

In an effort to stem Louisiana’s insurance crisis, the state House voted Wednesday to allow insurance companies more freedom to drop homeowner policies. This includes a change to the “three year rule,” which prohibits companies from dropping policies held for three or more years.


The sponsor of House Bill 611, Rep. Gabe Firment, believes it is necessary due to the fact that Louisiana is the only place in the world with such a policy.

Republicans strongly supported HB 611, while Democrats voted in opposition. The vote was 72-32.


“Passage of HB 611 will simply bring Louisiana into alignment with other states and help create a more stable environment based on free market principles and competition,” Firment, R-Pollock, told the House.

HB 611 is now on the way to the Senate, where a similar bill, Senate Bill 370, won on a 28-9 vote Tuesday.


Under this legislation, insurance companies are not allowed to drop more than 5% of their policyholders in a single parish each year. In extreme circumstances, the insurance commissioner would be allowed to authorize more than 5%. 

Rep. Matthew Willard, D-New Orleans, spoke against the bill, saying he feared that insurance companies would leave policy holders on the coast high and dry for next year's hurricane season.


Early calculations imply that one of the versions is likely to win final passage in the coming days.


Firment’s bill is just one piece of legislation out of 19 being pushed by Time Temple, the new insurance commissioner for Louisiana. Elected last year unopposed, Temple believes that creating a free market for insurance companies will encourage more companies to come to Louisiana and decrease the current soaring rates.

Real Reform Louisiana, a non-profit bipartisan organization dedicated to lowering insurance rates for the state, believes that this legislation would cost homeowners their policies, making them turn to the state’s insurer of last resort— with rates 10% higher.


If passed, the bill would take effect on Jan. 1, “well after hurricane season has passed,” Firment said.


He said there is no present data on how many homeowners benefit from the three-year rule, so no one can say how many might lose their policy if insurance companies drop 5% of them.


“This is going to be a very refined, precise and surgical non-renewal,” Firment said. “It’s very minimal.”


But Democrats like Rep. Edmond Jordan questioned whether significant numbers of insurance companies would want to write more policies in Louisiana.

“None of them have said if you drop the three-year rule, they will definitely come here,” he said.

Comentários


bottom of page