Louisiana Insurance Commissioner Jim Donelon wants to use $100 million in state money as financial incentives for insurers, hoping the lure will make companies more likely to write homeowners policies in coastal parishes.
The so-called “surplus match” plan would create a fund from which established insurance companies would receive payments in exchange for writing policies along the coast, properties at greater risk of hurricane damage and now insured by the state-controlled Louisiana Citizens Property Insurance Corp. Only established firms with a net worth of $25 million or more would be eligible, Donelon said March 23 at a news conference.
The goal is to reduce the number of properties now insured by Citizens, the “insurer of last resort,” which charges rates higher than private firms, for homeowners who can’t find insurance elsewhere. Citizens had 125,000 policies before Hurricane Katrina and 148,000 now, Donelon said.
Gov. Kathleen Blanco has set aside $100 million in her budget proposal for some form of insurance fix, though she hasn’t specified how she wants that money spent. Donelon said Blanco has been briefed on his plan, but has not taken a position.
Sen. Ken Hollis, R-Metairie, a member of the Senate Insurance Committee, will sponsor the bill that would create the fund, Donelon said at the news conference.
The idea for the fund came from the Louisiana Association of Business and Industry, Donelon said, a pro-business lobbying group that is often at odds with the Blanco administration.
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