What About Louisiana Senate Bill 19?

According to Louisiana Senate Bill 19, Louisiana Citizens Property Insurance Corporation would be required to get approval from the state House and Senate committees before rate increases of more than 25% could go into effect.  The bill, sponsored by Sen. Bret Allain, was introduced in the Senate due to large rate increases many Citizens policyholders saw in certain territories last year.  The bill would allow lawmakers the opportunity to analyze and consult experts on the necessity of rate increases proposed by Citizens before any large rate increases were implemented.

Currently, Citizens is required by law to have rates that exceed by at least 10% the higher of:

  • The market rate in each parish.
  • The actuarially justified rate in each parish.

Citizens performs a rate study annually that analyzes the current market rates in each parish and analyzes the actuarially indicated rates in each territory.  Rate increases proposed and approved are based on either the market rate or the actuarial indicated rate.  The result in the past has left some policyholders with large rate increases that they feel they cannot handle.  If LA SB 19 is passed, lawmakers would be given the opportunity to approve any rate increases greater than 25% and possibly implement the rate increases over a period of two to five years.

The Bill has passed in the Senate with 36 yeas and 0 nays, and has moved to the House for consideration.

What do you think the effect of this bill would be on Citizens rates?  Would it result in lower rate increases year over year and provide relief to policyholders?  Could it hurt Citizens’ goal of being the “Insurer of Last Resort” if it results in blocking rate increases that keep Citizens rates higher than the market?  Is it a good idea to put approval of large rate increases in the hands of lawmakers rather than continuing with the current laws governing Citizens’ rating?