Little Help from La. Lawmakers for Skyrocketing Insurance Costs

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Louisiana homeowners hoping for relief from insurance bills that were boosted by the hurricanes received little help from lawmakers.

Legislators lamented, complained and worried about rising insurance costs that could stifle rebuilding efforts after hurricanes Katrina and Rita and that could hinder home buying around the state.

But they didn’t devise many plans to address the problems before they wrapped up their work and went home a few weeks ago.

One potential bailout was hatched in the final days of the legislative session – but it takes so long to kick in that lawmakers can choose to undo it before it could ever help anyone avoid their increasing property insurance bills.

The plan would tap into a $150 million state emergency response fund set aside by lawmakers to cover costs of sheltering, transportation and other needs if the state has multiple evacuations this hurricane season.

If there’s any money left in the fund by the start of the next fiscal year on July 1, 2007, up to $50 million of that could be used to help shore up the state-run insurer of last resort, Louisiana Citizens Property Insurance Corp., which is causing insurance bills to rise.

The insurance company offers homeowners insurance to those who can’t get it on the open market. Homeowners around Louisiana face larger insurance bills to help cover the borrowing Citizens has done to pay for insured home damage after Katrina and Rita.

That borrowing will be paid off gradually by assessing private insurance companies a regular fee that they can pass onto all their Louisiana customers – by increasing premiums by as much as 20 percent each year until the debt is paid.

Any money the state would put toward paying down some of Citizens’ debt would lower that assessment on insurers and people who carry private insurance. In other words, it would keep insurance bills from rising even higher.

Florida and Mississippi have done similar insurance bailouts.

Louisiana’s state Senate wanted to use some of the emergency money in the current fiscal year, after hurricane season ended in November, to lower the assessments caused by Citizens. Sen. Robert Adley, D-Benton, said the state could afford to help people avoid hefty insurance bills.

“We give pay raises for everybody and their brother down here this time. We’ve taken care of everybody we can. But we haven’t done anything to help the policyholders of this state,” Adley said.

However, Rep. John Alario, chairman of the House budget committee, got lawmakers to agree to push the possible Citizens payment back to July 2007 so Louisiana could have the full emergency fund, not just for hurricanes, but also in case of tornadoes, ice storms or other emergencies.

That will leave the money susceptible to next year’s legislative budget process where the insurance dollars could be stripped entirely. Several lawmakers said homeowners shouldn’t tie their hopes to that aid emerging unscathed when they hash out budget matters next year.

Without that assistance, Louisiana residents could point to little from the session that helps alleviate the hurricanes’ impact on homeowners’ insurance, said Rep. Jim Tucker, R-Terrytown.

Lawmakers did attempt to give some relief to those who are battling with their insurance companies over Katrina and Rita claims – but that legislation is headed to court first.

The Legislature approved a bill that would extend the deadline for victims of the hurricanes to file homeowners or commercial property claims with their insurance companies, at least until Sept. 1, 2007, for Katrina claims and Oct. 1, 2007, for Rita claims.

Amid questions on whether the measure would improperly violate contracts individuals signed with insurance companies, lawmakers included a provision requiring Attorney General Charles Foti to file a lawsuit seeking a ruling from the courts about whether the statute is constitutional. Foti’s spokeswoman said the lawsuit should be filed by early this week.

Meanwhile, some lawmakers are suggesting Blanco should call the Legislature back in the coming months for a special session to deal specifically with insurance relief. Blanco doesn’t seem inclined to do so, saying on the final day of the regular legislative session that she hoped “not to have to call another special session during my tenure.”

Editor’s note: Melinda Deslatte covers the Louisiana State Capitol for The Associated Press.