House of Representatives votes to allow insurers to evict homeowners | Insurance business America
Bill wants to reduce insurance costs for many
Insurance News
By Kenneth Araullo
The Louisiana House of Representatives has passed a bill that would give insurers more flexibility in canceling homeowners insurance. That decision is being called a crucial step by advocates in addressing the state’s insurance crisis.
Currently, insurers are prohibited from discontinuing coverage for homeowners who have been a policyholder for at least three years.
The legislation, House Bill 611, led by Rep. Gabe Firment, aims to eliminate this unique three-year protection. Firment, a Republican from Pollock, called the bill essential to globally correcting Louisiana’s unique position on the issue.
According to Nola, the measure received a 72-32 approval vote, with the majority of Republican lawmakers supporting HB 611 and their Democratic colleagues disagreeing.
Firment argued that passage of the bill would align Louisiana’s practices with those of other states and promote a more stable insurance market through the principles of free enterprise and competition.
After approval in the House, HB 611 now heads to the Senate. It joins a related proposal, Senate Bill 370 from Sen. Adam Bass (R-Bossier City), which recently received 28-9 approval.
No more than 5% of policyholders per year
An important provision of the proposed law is the restriction imposed on insurers prohibiting them from canceling more than 5% of their policyholders in a given municipality per year, unless there are exceptional circumstances approved by the Insurance Commissioner.
Opposition voices like Rep. Matthew Willard (D-New Orleans) expressed concerns that the legislation could prompt insurers to stop providing coverage next year to their most vulnerable 5% of policyholders, particularly those residing in coastal areas.
Willard also emphasized the importance of the three-year rule as a key consumer protection given the widespread unaffordability of home insurance.
The legislative developments are part of a broader initiative that includes 19 bills approved by Tim Temple, the state’s newly appointed insurance commissioner. Temple, who took office after a campaign that promised deregulation to encourage more insurers to operate in Louisiana, sees increased market competition as a way to combat rising insurance costs.
Gov. Jeff Landry has supported Temple’s strategy, allowing him to move forward on insurance-related issues.
Criticism of HB 611
Former Insurance Commissioner Jim Donelon, a supporter of the three-year rule, argued that it plays a critical role in moderating insurance premiums by forcing insurers to maintain their customer base.
Critics like Real Reform Louisiana warn that passage of the law could lead to a spike in policy cancellations, pushing homeowners to turn to the state’s insurer of last resort, known for typically 10% higher rates .
If it becomes law, the law would take effect on January 1, bypassing hurricane season.
Despite the potential impact, there is still no concrete data on how many homeowners are currently benefiting from the three-year rule – and how many could therefore be affected by its repeal. Firment described the expected contract terminations as minimal and very targeted.
However, there remains skepticism about the bill’s ability to attract more insurers to the state. Another Democratic representative emphasized that there are no firm commitments from insurers to enter the Louisiana market if the three-year rule is eliminated.
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2024-03-28 15:48:20
www.insurancebusinessmag.com
