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La.’s $100M incentive program commences

Louisiana began taking applications Oct. 2 for a $100 million incentive program designed to get insurers to write more property coverage in the state.

The goal of the program is to make private insurance more available in storm-stricken southern Louisiana.

Insurance Commissioner Jim Donelon has made presentations to a number of companies, said Denise Brignac, deputy insurance commissioner of financial solvency.

“I personally have spoken to about 10 different prospects, not including the companies Commissioner Donelon has met with,” Brignac said.

The program probably won’t exceed the $100 million available, Brignac said. But the department hopes enough insurers will apply for the grants to use all of the money.

Under the initial phase of the program, qualified insurers may apply for grants of $2 million to $10 million. The insurers must commit the same amount in new capital and use that money and the matching grant to write new property insurance policies.

Insurers must write at least $2 in new premiums for each dollar in capital, under the program. However, Donelon has said insurers usually write $3 in premiums for every dollar in capital, which means the program could generate $400 million or more in new property insurance coverage.

The program requires that 50 percent of the new coverage be sold in the 37 parishes affected by Hurricanes Katrina and Rita. Twenty-five percent of the new premiums must come from policyholders whose property is insured by the Louisiana Citizens Property Insurance Corp., the state-run property insurer of last resort.

A joint legislative committee will have to review and approve applications accepted by the Department of Insurance.

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Topics Carriers Louisiana Property