Interest in Louisiana is rising after property reforms, and there’s more to come: Insurance Commissioner Temple

The successful passage of a package of bills designed to reform Louisiana’s property insurance market is a key step towards restoring confidence in the state, and according to Insurance Commissioner Tim Temple, there’s more to come.

It was announced in May that Governor Jeff Landry and the State Capitol had signed four of Temple’s insurance reform bills into law, paving the way to create a more balanced, stable and affordable property insurance market in Louisiana.

The bills passed into law, SB 323, SB 295, HB 611, and HB 120, each have a different focus but all aim to create more balance in the law and ultimately make property insurance more affordable to citizens, while simultaneously making the state competitive with others and more attractive to insurers and reinsurers.

Of course, it will take some time before the full benefits of the reforms come to fruition. Still, in a recent interview with Reinsurance News, Commissioner Temple confirmed that positive discussions with carriers are already taking place.

“I’ve been having conversations since these bills were signed into law,” said Temple. “I currently have a carrier that is going through the application process to come in and start writing property in Louisiana. And I’m having conversations with the CEO of another carrier that is working toward getting to the point of filing an application with our department.”

Since the reforms, numerous other carriers have also started looking at Louisiana internally and are now wondering whether the steps taken so far are sufficient to enter the state’s property insurance market.

“Now, certainly, one or two companies, that’s not the end of it, that’s not the solution. We need much more capacity than that. But I think it’s indicative that the changes we made are what needed to be done. We listened to what the market had to say. And I think this is a good example. We’re doing it,” said Temple.

“I would also add that I’ve had conversations with marketing reps for some of the larger national companies that are telling me that the Louisiana marketplace is being talked about in the C-suite, in the boardrooms, for the first time in a long time. I’m not saying that that means they’re going to do business, but they are looking and paying attention to what we’re doing in Louisiana,” he continued.

Many of the reform bills that were part of Temple’s legislative package this past session, were born out of a visit he had to the market in December of last year. Following discussions with Lloyd’s participants, brokers, syndicates and underwriters, Temple became aware of some recurring themes and issues.

“One was that Louisiana had two conflicting statutes as it relates to bad faith penalties, and they cause confusion. And to me, confusion is inefficiency and inefficiency is expense. So, we brought a bill that addressed that, to clean that up,” said Temple.

“The second issue I heard frequently was that Louisiana is very unique with the three-year rule,” he continued.

In Louisiana, property writers, once they have offered a third renewal on a homeowner’s policy, then that carrier is forced to offer a renewal as long as they do business in the state of Louisiana.

“We are the only state in the US that has that, and as far as I know, we’re still the only jurisdiction on the planet that has anything like that. So, again, I know that that causes additional costs for companies because it takes away a carrier’s ability to manage their book. It traps capital,” explained Temple.

The third issue Temple heard was that Louisiana had a prior approval system when it referenced rate changes, which had gotten highly political over the years.

“I wanted to change this to a system that allows carriers the flexibility to change rates as market conditions dictate,” said Temple.

“So, my package of property bills included those three things amongst others, and we were able to get those passed. We had the support of the governor. He was very engaged in supporting property reform,” he added.

Importantly for the state’s residents, current insurers and future property market players, Temple emphasised that his department isn’t going to sit on its heels after the passage of these bills.

“I’m in constant communication with the market to update, to tweak, to reform,” said Temple. “There’s always something changing because we’re competing against those other states and their legislative bodies. They’re going to continue to improve their regulatory and legal environment. So, if we aren’t constantly improving, then we’re falling behind.”

As a regulator, Temple’s goal is for Louisiana to be seen as a state that is fair and just when it comes to administering the regulations and holding companies accountable.

“I don’t want it to be punitive. At the same time, we need to make sure that our laws are such that companies feel like they’re going to be given a just opportunity to come in and conduct business,” said Temple.

As well as the recent reforms and constant communication with the market, Louisiana now also has its own fortified roof program.

For that program, explained Temple, $30 million was allocated last year to get things started, and the legislature has allocated an additional $15 million to continue the program. Since its launch last October, the State of Louisiana has now fortified more than 1,000 roofs.

“And one other important provision, there was a sunset on the fortified roof program, but we were successful and got the legislature to remove that.

“So, I think that demonstrates that Louisiana is committed to the long-term mitigation of property risk in Louisiana, and we’re going to continue to work with improving building codes.

“Again, I understand that I’ve got to compete against the other states, and if all the other states have some type of fortified program, and we don’t, well, then, you don’t get looked as favourably. So, Louisiana is serious about mitigating the risk, and we’re going to continue to push that,” said Temple.

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