New law hits pause on premium surcharge
New law hits pause on premium surcharge | Insurance Business America
Property
New law hits pause on premium surcharge
Suspension in place until end of 2027
Property
By
Terry Gangcuangco
Louisiana Citizens Property Insurance Corp. will halt its mandatory 10% premium surcharge for the next three years, with policies issued or up for renewal after the New Year not including the surcharge. The suspension, as per a new law that went into effect this month, will last until the end of 2027.
Meanwhile, a provision states that if Citizens writes less than 20% of residential property coverage in any parish, the insurance commissioner may recommend reinstating the surcharge.
Initially, the surcharge was introduced to ensure the state’s last-resort insurer’s premiums were higher and noncompetitive with private market options. Recent market volatility – characterized by rising rates and insurers scaling back or exiting the state – though, prompted legislators to implement reforms aimed at attracting more insurers and fostering competition to lower rates.
Deputy commissioner of public affairs at the Louisiana Department of Insurance, John Ford, emphasized that the reforms need time to take full effect.
Louisiana has recently introduced numerous insurance reforms spanning changes to nonrenewal rules, the establishment of a claims-handling timeline, and the permanent establishment of the state’s home hardening program.
In April, Insurance Commissioner Tim Temple declared having taken “a bold first step” while talking about the passage of property insurance reform legislation in the state.
Referring to Senate Bill 323: Provides for fair claims processing, Senate Bill 295: Provides for rate filing procedures and requirements for rate making, House Bill 611: Provides relative to homeowners’ insurance and termination of certain policies, and House Bill 120: Repeals the termination date relative to the Louisiana Fortify Homes Program, Temple said: “With the final passage of SB 323, SB 295, HB 611, and HB 120, we have taken a bold first step in addressing the insurance crisis that most Louisianans have been facing for several years now.”
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