Louisiana Insurance coverage Commissioner Tim Temple (pictured high) felt political winds blow at his again this week as he launched an effort to reform a market that has seen carriers disappear and prices soar within the wake of catastrophic climate over the previous few years.

Gov. Jeff Landry opened the state’s legislative session on Monday by calling on lawmakers to work with Temple on a package deal of reforms.

“We’re experiencing an insurance coverage disaster because of years of back-to-back hurricanes which have decimated our southern coast,” Landry mentioned in his speech. “These storms overwhelmed the insurance coverage trade.”

Landry mentioned lawsuits over claims are clogging state and federal courts. He famous that a number of carriers had left the state and those who stay have raised charges to cowl losses. Many householders and companies “can not purchase insurance coverage within the present surroundings,” he mentioned.

“Our new insurance coverage commissioner is working tirelessly to search out options that make Louisiana a lovely marketplace for extra corporations to put in writing right here,” Landry mentioned. “Commissioner Temple believes, and I agree with him, that the de-regulatory measures he’s endeavor will enhance market situations.”

Elected final 12 months, a lot of Temple’s reform agenda must be authorized by the legislature, whose session is scheduled to finish in early June. He mentioned there’s momentum for that effort.

“I really feel cautiously optimistic,” Temple, 54, mentioned in an interview “It’s virtually a way of desperation whenever you speak to people and enterprise house owners. We’re centered. From the governor down, everyone acknowledges we’re in a disaster and that we’ve received to do one thing.”

The state skilled a file stage of hurricane exercise in 2020 and 2021. Insurers paid out greater than $23 billion in additional than 800,000 claims filed from these two years, in keeping with the Insurance coverage Data Institute. From July 2021 by February 2023, the state noticed 12 insurers that write householders’ insurance policies declare chapter.

Louisiana as an ‘outlier’

Because the state struggles with the affordability and availability of insurance coverage, Temple mentioned he’s addressing legal guidelines and rules the place Louisiana is “an outlier” on insurance coverage oversight. He’s in search of to loosen rules and provides carriers extra latitude to conduct enterprise.

As an illustration, he needs to remove the so-called three-year rule that prohibits property insurers from dropping clients if the service has renewed the coverage 3 times or extra. The service should provide insurance coverage to the shopper for so long as the service operates within the state.

“That’s actually not free market in any approach form or kind,” Temple mentioned.

Louisiana is the one state that has a three-year rule, Temple mentioned, and it inhibits insurers from doing enterprise whereas additionally trapping capital.

“It makes us an outlier in a really unfavourable approach,” Temple mentioned.

He’s making an attempt to alter Louisiana’s regulation that requires insurers to get prior approval for fee will increase. As a substitute, he favors a file-and-use strategy that will facilitate the introduction of recent insurance coverage merchandise.

“I’m making an attempt to assist form Louisiana right into a state from a regulatory framework that corporations really feel that they will pivot as market situations dictate, whether or not that’s by numerous fee adjustments or coverage kind adjustments,” Temple mentioned.

Temple can be in search of to reform guidelines pertaining to dangerous religion insurance coverage claims, reminiscent of when the clock begins ticking to show losses.

“I actually need the patron to be protected and get what they’re owed, nevertheless it shouldn’t be on the expense of getting one thing that you just’re not,” Temple mentioned. “We’ve received to ensure the regulation could be very clear; the timelines are outlined; everybody is aware of what the principles are. I need to be sure that it’s a good claims course of.”  

Critic says reforms would hurt customers

However a critic asserted that Temple’s agenda is misguided.

Ben Riggs (pictured instantly above), government director of Actual Reform Louisiana, a shopper advocacy group, mentioned it might damage customers and “pad the pockets” of insurers slightly than revitalize the Louisiana insurance coverage market.

“I don’t suppose taking rights away from storm victims goes to make Louisiana extra aggressive,” Riggs mentioned. “It’s simply going to make it more durable for policyholders and customers to carry their insurers accountable.”

As an illustration, ending the three-year rule will be certain that folks in areas the place insurers finish protection will see their charges go up considerably, Riggs mentioned.

The reforms Temple has proposed are “not going to decrease the charges or make the product extra obtainable for customers,” Riggs mentioned. “It’s going to make the product extra ineffective for customers.”

‘Greatest shopper safety is…alternative’

Temple countered that he’s not softening shopper protections. As a substitute, he’s making an attempt to guarantee that clients can acquire property insurance coverage insurance policies.

“I’m making an attempt to place the horse in entrance of the cart,” Temple mentioned. “Now we have received to have a market that has an reasonably priced product to purchase on which they will file a declare.”

Attracting extra insurers to Louisiana by regulatory reform will give clients extra leverage, Temple mentioned.

“One of the best shopper safety any of us can ever have is alternative,” Temple mentioned.

Temple doesn’t want legislative approval for each reform. As an illustration, after assuming workplace, he eradicated a so-called desk rule that had capped an insurer’s revenue at 10% with a fee enhance. 

“The change was made to make Louisiana extra aggressive with different coastal states in the case of attracting insurance coverage and reinsurance corporations deciding the place they’d like to speculate and do enterprise,” John Ford, a spokesman for the Louisiana Division of Insurance coverage, wrote in an e mail.

Riggs mentioned the transfer offers a greenlight to insurers to bake in extreme revenue margins.

“That is utterly tone deaf and dangerous for householders who’re being priced out of their properties and small enterprise house owners who’re struggling to maintain their doorways open,” Riggs mentioned.

There’s one space the place Temple and Riggs agree. They each assist initiatives to strengthen homes and different buildings to resist extreme climate.

“I’m an enormous proponent of the fortified roof,” Temple mentioned.

Insurance coverage issues: Extra pervasive than partisan

Temple took workplace in January after profitable election final October when his opponent dropped out of the first. He changed Jim Donelon, who had served 4 phrases because the state’s insurance coverage commissioner since 2006. Donelon supplied his personal reform package deal final April however declined to run for a fifth time period in 2023.

Temple labored within the insurance coverage trade for greater than 20 years. He was largely lately president of Temptan, a family-owned funding administration agency in Baton Rouge. He’s now on the political aspect of the insurance coverage enterprise, serving as one in every of seven Republican statewide workplace holders in Louisiana.

Home and Senate leaders in addition to rank-and-file lawmakers assist insurance coverage reforms, Temple mentioned. Though Republicans management each chambers of the state legislature, insurance coverage is extra of a pervasive than partisan problem.

“Everyone is coping with an insurance coverage disaster – both immediately or by their constitutents, and sure each,” Temple mentioned. “So, they’re on the lookout for options.”

Louisiana insurance coverage management timeline

• August 16, 2023 – Tim Temple elected insurance coverage commissioner

• October 17, 2023 – Temple creates an insurance coverage advisory council 

• “The council’s duty is to make suggestions for legislative particular periods and common periods designed to make basic adjustments to how Louisiana works with and regulates the insurance coverage trade” 

• December 14, 2023 – Temple holds city corridor 

• “He mentioned he’s specializing in bringing property house owners instant premium aid. However stresses he’s not suggesting mandates for premium adjustments, as a result of that solely drives carriers away.” 

• January 8, 2024 – Assumes workplace 

• February 27, 2024 – Testified earlier than a legislative committee  

• “He needs to amend the rule that forestalls insurers from arbitrarily dropping clients if a property proprietor has been with the corporate for not less than three years. Temple says Louisiana is the one state that doesn’t enable insurers to make adjustments to make sure they correctly handle their danger. 

Temple additionally proposes altering the speed and form-filing system. He needs the present prior approval requirement changed with file-and-use, permitting insurance coverage corporations to file proposed fee adjustments after which begin utilizing them instantly.” 

• March 7, 2024 – Funding for the Louisiana Fortify Properties Program 

• March 11, 2024 – Legislative session begins 

Former Insurance coverage Commissioner Jim Donelon

• February 15, 2006 – Donelon assumes place after James Wooley resigns 
• October 22, 2011 – Elected for his second time period 
• October 24, 2014 – Elected for his third time period 
• October 12, 2019 – Elected for his fourth time period, defeating Tim Temple 

• August 26, 2021 – Donelon invoked Emergency Rule 47 

• “The insurance coverage commissioner’s emergency declarations are nothing new. Following Hurricane Laura in 2020, Donelon issued emergency declarations prohibiting insurers from cancelling or growing premiums and a mandate that well being insurers droop limitations on prescription renewals. Comparable declarations have been made after hurricanes Isaac, Gustav and different named storms… When policyholders have been having issues with Allstate after Hurricane Katrina, Donelon mentioned he fined the corporate $250,000.” 

• November 2022 – Donelon requires depopulation of Louisiana Residents 

• December 14, 2022 – Donelon name for particular session to fund an incentive program for insurers 

• “Donelon had initially pushed lawmakers to offer him not less than $15 million this week to get this system off the bottom, however legislators weren’t satisfied he wanted the cash that shortly.” 
• “Donelon has proposed resurrecting an insurance coverage firm incentive program initially put in place after hurricanes Katrina and Rita. Corporations prepared to put in writing insurance policies for high-risk properties would obtain public grants to assist cowl their prices.” 

• April 4, 2023 – LDI unveiled new reform package deal 

• “One of many payments offers insurers extra energy, when it comes to coping with policyholders who make claims… One other invoice would affect policyholders who need to assign their advantages to a contractor… Donelon additionally proposes adjustments to the appraisal course of… One other invoice would profit Louisiana Residents, the state’s insurer of final resort, by stopping it from being subjected to bad-faith fines.” 

• “Corporations taking part within the Insure Louisiana Incentive Program have collectively written greater than 50,000 insurance policies as of Nov. 30. Roughly 24,000 of these insurance policies have been taken from or prevented going into Louisiana Residents, the insurer of final resort, by the primary eight months of this system, in keeping with Louisiana Division of Insurance coverage (LDI) information.” 

• January 8, 2024 – Donelon leaves workplace