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Adams and Reese attorneys Bill Shea, Billy Wright and Hogan Crosby were interviewed in a Q&A in New OrleansCityBusiness, “What Homeowners, Businesses Need to Know About Special Legislative Session on Insurance Crisis.”

Over two dozen companies that wrote homeowners policies in Louisiana have either gone insolvent or pulled out of the insurance market. At the urging of Jim Donelon, the Louisiana Commissioner of Insurance, the Louisiana Legislature held a Special Session from January 30, 2023, to February 3, 2023, to pass two bills to fund the “Insure Louisiana Incentive Program.”

The Program’s primary goal seeks to increase the number of companies that write property insurance in Louisiana. It is anticipated that Gov. John Bel Edwards will sign the bills, and then Commissioner Donelon will issue an invitation for proposals from insurers that want to take part in the program.

While the Insurance Commissioner is still developing the final regulations that govern the Incentive Fund, as currently drafted, the Program would award grants of between $2 million and $10 million to each qualified insurance company. These companies would provide 100% matching funds for the grant. Each recipient will be required to write net premiums of at least two times that total amount. For example, if a company receives a $2 million grant, it will be required to match the $2 million, and then it will be required to write at least $8 million in net premiums. Insurers will also be expected to write policies in “high-risk” parishes.

“The average premium for home insurance in Louisiana is over $2,000 a year. That’s significantly higher than the national average,” said Shea. “The lack of companies active in Louisiana reduces the competition, thereby increasing the costs of premiums. This, combined with the threat posed by future hurricanes, poses a grim outlook for a state already battling to keep insurance affordable and available.” 

Shea continued: “Many homeowners were forced to obtain property insurance through Louisiana Citizens, the state’s residual market for those unable to obtain insurance through the voluntary market. By law, the premiums on the Citizens policies – which are already pretty high to begin with – are set to increase soon.”

Wright said the result of this special session is critical for the state’s economy. “Employees need to be able to afford their homes in Louisiana, and if not, we risk them leaving. Once the program is in full swing, homeowners, especially those on Citizens plans, should reach out to their agents and brokers to see if more insurance options are available,” Wright said. “This also is not a crisis limited to homeowners’ policies. Businesses have also seen their premiums increase, and they should reach out to their agents and brokers to see if cheaper options are available.”

The Program is largely a stop-gap measure, and Crosby said long-term solutions will be discussed in the April legislative session. “For instance, the Insurance Commissioner and many advocacy groups, would like to see a program that offers grants to homeowners to encourage replacement or the retrofitting of their roofs to higher standards,” Crosby said. “Doing this may help lower insurance rates because companies should be more in favor of writing policies to homeowners with stronger homes to withstand future hurricanes.”

Bill Shea advises clients on a host of insurance regulatory matters throughout the Southeast, as well as both commercial litigation and insurance litigation throughout Louisiana. He has successfully obtained Certificates of Authority for insurers seeking to do business in Louisiana, as well as other states. He also has assisted insurance companies with other matters involving licensing and compliance. He handles disputes between regulated entities and the Louisiana Department of Insurance. Shea earned his J.D. from Southern University Law Center and his B.A. from Southeastern Louisiana University.

Billy Wright focuses on general insurance defense, professional liability, management liability, and employment. He devotes the remainder of his practice to a wide array of litigation, including contract disputes, business torts, and disputes pertaining to successions, wills, and trusts. Wright has been recognized among Louisiana’s Rising Stars and Best Lawyers “Ones to Watch”. Wright earned his J.D. from Louisiana State University Paul M. Hebert Law Center and received his B.S. from LSU.

Hogan Crosby assists both the Adams and Reese Litigation and Labor and Employment practice area groups, along with practicing in general insurance defense. Crosby received his J.D. from Tulane University School of Law, and he is a graduate of Rhodes College, with a B.A. in Commerce and Business, a concentration in Finance, and a minor in History. Crosby formerly worked in the financial services industry, obtaining a FINRA Series 7 license and Colorado life accident and health insurance licenses.