Kennedy Says Homeowners Having to Choose Between Food, Drugs and Insurance

BATON ROUGE, LA – Members of the House Insurance Committee killed a Senate bill this week that would have required the state’s property insurer of last resort to report rate increases in excess of 25 percent a year, according to State Treasurer John Kennedy.

“It’s disappointing because it does us no good to make insurance available to folks who can’t afford it,” said Treasurer Kennedy. “Homeowners are being forced to choose between food, drugs and insurance, because these prices are so high and these increases are so shocking.”

Senate Bill 19 by Sen. Bret Allain (R) would have made it a requirement for the Louisiana Citizens Property Insurance Corporation to report to the Legislature any time the company planned to increase rates more than 25 percent in one year. The bill recently passed the Senate floor by a vote of 36 to 0.

Treasurer Kennedy, who by statute serves on the board of directors for Citizens, Rep. Joe Harrison (R) and Rep. Sam Jones (D), all testified in the House Insurance Committee on SB 19. In his testimony, Treasurer Kennedy pointed to the insolvency of Citizens, which recently requested to borrow $100 million from the State Bond Commission and was denied.

“If Citizens was a normal insurance company they’d be in receivership right now,” said Treasurer Kennedy. “They need additional capital even more now, because they’re broke. The company is backed by the taxpayers of the state, and we have to pick up the tab when something goes wrong. We shouldn’t be trying to make this company solvent on the back of our policyholders.”

Last year, Citizens made substantial rate increases in the state’s coastal parishes of 50 percent to 70 percent, with some parts of the state seeing increases as high as 171 percent. According to committee testimony, owners of a modest home who may have been paying $2,000 for wind and hail coverage received insurance bills from the company for almost $5,000.

“It’s unfortunate that with only three weeks remaining, that SB 19 will most likely not be heard again this session,” said Treasurer Kennedy. “This would have been a good chance for the Legislature to review the entire Citizens operation. It’s way overdue.”

Contact:
Sarah Mulhearn
(225) 342-0012
smulhearn@treasury.state.la.us