[StBernard] EDITORIAL: Leadership from Blanco, Donelon and Business Coalition Deliver Market Reform Laws to Loui
westley at da-parish.com
Fri Jul 20 22:28:43 EDT 2007
EDITORIAL: Leadership from Blanco, Donelon and Business Coalition Deliver Market Reform Laws to Louisiana
Periodically, the press office will publish editorials and columns that feature Governor Kathleen Babineaux Blanco's work in various areas. The following was released for publication by the American Insurance Association.
By John R. Marlow
Assistant Vice President
American Insurance Association
The 2007 legislative session in Louisiana resulted in three major pieces of legislation recently signed into law which will improve the ability of insurers to rate and underwrite homeowners insurance on a more competitive basis than ever before in the state. Regulatory modernization, creating an incentive program to attract new carriers while depopulating the homeowners' residual market (Louisiana Citizens Property Insurance Corporation) and protecting the state's previously enacted building code were cornerstones of the insurance market reform legislative agenda promoted by Governor Kathleen Blanco and Insurance Commissioner Jim Donelon.
Blanco and Donelon are to be commended for their leadership and congratulated for their success in navigating some treacherous political terrain to achieve these important victories for homeowners and insurers as both struggle to recover from the impact of the disastrous storms of 2005. After many months of negotiating, bill drafting and communicating with key policymakers and opinion-leaders in the state, these new laws will abolish the Louisiana Insurance Rating Commission (HB 960) and initiate a file-and-use rating system for personal lines of insurance, establish the Insure Louisiana Incentive Program (HB 678) and maintain the integrity of the Louisiana State Uniform Construction Code (HB 704).
In order to overcome competing interests and the traditional populist rhetoric that seeks to lay the blame for all the state's ills at the feet of insurers, Governor Blanco and Commissioner Donelon worked closely with the virtually every sector of the state's business community through the Coalition to Insure Louisiana. The support of this diverse and highly effective coalition was invaluable to the success of these bills being signed into law to provide long-term solutions to the recovery of the state's insurance market.
Although not every reform objective was achieved and some bills suffered disappointing changes in the final days of the session, the Coalition is well-positioned to pursue further reforms in 2008 to restore stability to the market and aid insurers in meeting the needs of their policyholders.
The details of Governor Blanco and Commissioner Donelon's successful legislative package supported by the Coalition to Insure Louisiana include:
HB 960 abolishes the Louisiana Insurance Rating Commission and establishes the Office of Consumer Advocacy within the Department of Insurance. This law provides for a file-and-use rating system for personal lines and gives the commissioner of insurance 45 days to review any rate changes. This new law also establishes a policyholder bill of rights for consumers that essentially restates consumer protections already in current law and does not create additional causes of actions or further penalties not otherwise provided for under Louisiana statute. The law takes effect on January 1, 2008.
HB 678 establishes the Insure Louisiana Incentive Program, which provides that the commissioner of insurance may grant matching capital funds to qualified property insurers from a $100 million fund. It requires the commissioner to issue a public invitation to insurers to submit grant applications upon implementation of the program and that the commissioner not allocate individual grants less than $2 million nor in excess of $10 million in the initial applications. In the initial allocation of grants only, the commissioner shall allocate 20 percent of the total amount of funds available for grants to domestic insurers.
It further provides that a second invitation for grant applications shall be issued by the commissioner in the event that all monies in the fund are not allocated in response to the first invitation for grant applications. In the second invitation, the commissioner shall not allocate individual grants less than $2 million nor in excess of $10 million, but insurers who have been allocated a grant in response to the first invitation may apply for an additional grant up to the $10 million limit.
The bill establishes criteria for insurers applying for grants. Insurers must write 25 percent of the net written premium for policyholders whose property was formerly insured by Citizens. The measure specifies that at least 50 percent of the net written premium shall be received from policyholders whose property is located in the parishes included in the federal Gulf Opportunity Zone Act in Louisiana. The new law further provides that at least half of the 25 percent of net written premium to be received from policyholders who were formerly insured by Citizens must be policyholders whose property is located in the parishes included in the federal Gulf Opportunity Zone Act in Louisiana. This law becomes effective December 1, 2007.
HB 704 maintains the Louisiana State Uniform Construction Code, the statewide building code, with additional provisions added to the code. This bill was a product of a compromise with inland legislators who wanted to abolish the statewide building code altogether. Ultimately, the additions to the building code statute include a provision making service on the code council "at the pleasure of the governor" and the provision that all municipalities and parishes in the state shall enforce only the construction codes provided for in present law. This law became effective immediately upon signature by the Governor.
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