The Legislature should have oversight of Gov. Kathleen Blanco’s plan to offer $100 million in taxpayer money to insurance companies that agree to write homeowners policies in coastal Louisiana, a Senate committee voted June 22.
The Senate Finance Committee amended Blanco’s proposal so that the Legislature’s budget committee would have power to block the grants, up to $10 million each, from being handed out to private insurers that agree to write new policies in the hurricane-prone zones.
The bill originally gave lawmakers no influence in the process. The amended measure would allow the state Department of Insurance to approve the grants, contingent upon final approval from the budget committee.
Insurance Commissioner Jim Donelon, the plan’s chief backer, didn’t object to the change.
But Donelon met some skepticism about the proposal’s central thesis: that the grants will lure so many insurance companies to Louisiana that competition will rise and the cost of insurance will drop. Sen. Butch Gautreaux and others questioned whether it would work.
Donelon said the plan is Louisiana’s best shot at improving the state’s insurance market and driving down the cost of homeowners and commercial property insurance.
Donelon said, “Will I guarantee that rates will go down? No.”
“Absolutely not,” said Gautreaux, D-Morgan City. “Because it’s not going to happen.”
The panel then approved the amended bill without objection. The measure, by Rep. Karen Carter, D-New Orleans, moves to the full Senate for debate. Money to fund the proposal also needs approval from lawmakers.
The $100 million plan is one part of Blanco’s package of proposals that aim to halt the steady increases in homeowners and commercial property insurance rates. Other Blanco proposals in play in the Legislature include:
–A Carter bill to abolish the state’s insurance regulatory commission, another industry-friendly attempt to lure more insurers to the state. It was amended in the Senate by Sen. Nick Gautreaux, D-Meaux, to toughen an existing state law protecting policyholders. It awaits House agreement to that change, or could go to a House-Senate conference committee.
–A measure to create a new office of consumer advocacy inside the Department of Insurance, to represent policyholders with complaints against insurance companies. The bill by Sen. Don Cravins, D-Opelousas, was amended in the House and awaits approval from the Senate or a possible conference committee.
House Bill 678 is at http://legis.state.la.us/.
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