Donelon says plan would attract insurers
New Orleans City Business
March 23, 2007 By CityBusiness staff report
BATON ROUGE - In an effort to get property insurance companies to write more policies - and make them affordable - in post-hurricane Louisiana, Insurance Commissioner Jim Donelon today announced a bill he plans to propose for the upcoming spring session of the Legislature.
Under the Insurance Capital and Surplus Match Incentive Program, the state would provide a matching grant to a qualifying insurance company that commits capital to write new property insurance policies and take policies out of the state's insurance program of last resort.
If all goes according to plans, the program would provide an additional $400 million to $600 million in property insurance capacity in Louisiana.
The plan relies on a legislative appropriation of $100 million.
Insurance companies would have to meet certain capital and reinsurance requirements and have experience in writing property insurance.
The state would match participating companies on a dollar-for-dollar basis. The maximum matching fund must not exceed $10 million per public offering. A second public offering would be allowed if all funds were not used in the first offering.
Every company would have to commit a minimum of $2 million.
Companies must use the capital and state matching funds to write new property insurance policies in the state for at least five years.
If an insurance company does not comply with the program's requirements, the company must pay the state back the matching funds on a pro rata basis.