Released: October 12, 2007

There has been considerable discussion in the national press about the new insurance environment being created by the legislation adopted in Louisiana and in our sister coastal states following the catastrophic hurricanes of 2005. While we are finally seeing signs of a better insurance climate in Louisiana, we continue to receive unwarranted and undeserved criticism from some in the insurance industry, despite the pro active approach taken by state officials to reform our insurance market, according to Ted Haik, chairman of the Louisiana Property and Casualty Insurance Commission.

The Commission, whose 22-member board is composed of national and state trade associations, as well as insurance regulators, legislators, state officials and consumer representatives, is seeing a brighter outlook for the insurance marketplace in Louisiana, said Haik.

In the last decade, Louisiana legislators have approved numerous reform measures aimed at strengthening our homeowners and commercial property markets. Louisiana was among those coastal states that experienced a drastic reduction in the voluntary insurance market following Hurricane Andrew in 1992. In trying to balance the needs of Louisiana’s citizens with the concerns and reticence of insurers, laws were enacted that revamped the system for financing our state’s residual market plans for property insurance, provided a “file and use” system for rate increases or decreases averaging ten percent or less, and instituted commercial deregulation as a modified “use and file” system.

In December 2005, Louisiana enacted its first statewide building code, one of the country’s most stringent. HB 704 (Act 335), passed in the 2007 Regular Session, maintains the Louisiana State Uniform Construction Code, the statewide building code, and provides resources for training and enforcement. The highlights of the code are:

• It applies to all new construction and major renovations greater than 50 percent.
• Residential dwellings must meet the International Residential Code 2006 (IRC) and commercial buildings must meet the International Building Code 2006 (IBC).
• The LA State Uniform Construction Code Council (LSUCCC) oversees training and certification.
• Local governments enforce the building code using International Code Council (ICC) certified inspectors.
• The state, the Governor’s Office of Homeland Security and Emergency Preparedness, and the Louisiana Recovery Authority have allocated $35 million for the purposes of training, code office initial expense and code enforcement.

The Legislature followed up this year with the January 1, 2008 abolition of the Louisiana Insurance Rating Commission, the panel of political appointees who regulate insurance rates. The Rating Commission is the most frequently cited impediment by insurers to establishing competitive rates. It has also discouraged many insurers from entering the Louisiana market. Scrapping the Rating Commission will go down as one of the most positive insurance regulatory reforms in Louisiana in recent history.

To further boost market development in Louisiana, the Legislature enacted the Insure Louisiana Incentive Program. It provides $100 million in funding for capital matching grants to insurers writing new property insurance in the state. The public invitation requesting applications for participation in the program was issued October 2, 2007, and will remain open until November 1, 2007.

In the wake of hurricanes Katrina and Rita, our policyholders were troubled by problems with adjusters, followed by skyrocketing rates and shrinking availability of coverage. “In this political caldron, I think our Legislature showed restraint,” said Haik.

The Louisiana Property and Casualty Insurance Commission was created 10 years ago by the Legislature, and its role was expanded in 2001 from auto insurance to include homeowners and workers’ compensation. The charge of the Commission is “to review and examine the availability and affordability of property and casualty insurance in the state” culminating in an annual report of its studies and legislative recommendations to the governor, Legislature, and commissioner of insurance.

The Commission members have brought diverse views to bear on a number of topics and the effort has remained cooperative, constructive, and effective for the Louisiana market. Many of the Commission’s recommendations have paralleled laws ultimately enacted by our Legislature. The result has been to create a statutory environment in which responsible, solvent insurers should increasingly be able to provide products equitably priced through market-based competition.

LPCIC Board Members:

Ted M. Haik, Jr., Chairman Richard Clements, Vice-Chairman
Haik, Minvielle and Grubbs Law Firm Clements Insurance Services, LLC

James J. Donelon
Commissioner of Insurance

Jeff Albright Christine T. Berry, Ph.D. Lorrie K. Brouse
Chief Executive Officer Assistant Professor Regional Counsel
Independent Ins. Agents & Brokers of LA University of LA at Monroe Allstate Insurance Company

Senator James David Cain H. Marcus “Marc” Carter Representative Karen R. Carter
Chairman President Chairperson
Senate Committee on Insurance Imperial Fire & Casualty Insurance Co. House Committee on Insurance

Col. James Champagne Joseph E. Deutsch, CPCU Representative Rick Farrar
Executive Director Executive Director Vice Chairman
LA Highway Safety Commission Property Insurance Association of LA House Committee on Insurance

Nicholas Gachassin Steve Hymel F. Charles “Chuck” McMains
First Assistant Attorney General Commissioner, Office of Motor Vehicles Attorney at Law
LA Department of Justice LA Dept. of Public Safety/Corrections Jones Walker Law Firm

Tom O’Neal Senator Julie Quinn Kimberly L. Robinson
President Member Special Counsel
Hercules Transport, Inc. Senate Committee on Insurance Office of the Governor

Richard L. Stalder Earl B. Taylor Aubrey T. Temple, Jr.
Secretary District Attorney Chairman of the Board
LA Dept. of Public Safety/Corrections 27th Judicial District LA Workers’ Compensation Corp.

Karen Winfrey
Assistant Secretary, Office of Workers’
Compensation, LA Department of Labor