Donelon Announces Legislation to Attract Insurers
Released: March 23, 2007
Commissioner of Insurance Jim Donelon announced today he will propose a bill for the 2007 Session of the Louisiana Legislature designed to increase the availability and affordability of property insurance and depopulate the Louisiana Citizens Property Insurance Corporation (Citizens), the state's property insurer of last resort.
Commissioner Donelon said the purpose of the Insurance Capital and Surplus Match Incentive Program would be to attract new property insurance market capacity to Louisiana. If a qualified insurer commits new capital to write new property insurance policies in Louisiana and takes policies out of Citizens, the program would provide a state matching grant for the insurance company.
Here's how the program would work:
- Propose a legislative appropriation of $100 million.
- To qualify, insurance companies would have to meet certain capital and reinsurance requirements and have experience writing property insurance.
- The state would match participating companies dollar for dollar.
- The minimum capital commitment for an insurance company is $2 million.
- The maximum matching fund is not to exceed $10 million per public offering, with a second public offering allowed if all funds are not used in the first offering.
- Participating companies must use the capital and surplus and the state matching grant to write new property insurance policies in Louisiana for a minimum period of five years. If an insurer fails to comply with the requirements of the program, the insurer must repay the remaining state matching funds on a pro rata basis.
If fully utilized, it is expected that the Insurance
Capital and Surplus Match Incentive Program would provide an
additional $400-$600 million of property insurance capacity
to Louisiana.