BATON ROUGE, La. (AP) — Longtime Louisiana Insurance Commissioner Jim Donelon, charged with finding solutions to reduce property insurance costs that have plagued the state, announced Tuesday that he would not run for re-election in October.
Donelon, a Republican, has come under the spotlight amid the state’s ongoing property insurance crisis, exacerbated by devastating hurricanes in 2020 and 2021. But even as Donelon laid out plans to potentially bolster the state’s struggling homeowners insurance market and lower premium costs, he said his time at the Louisiana Department of Insurance — where he served as a commissioner for 17 years — is coming to an end.
“(I) have spent nearly 50 years serving the Louisiana public,” Donelon, 78, said Tuesday. “I want to enjoy the remaining years of my life with my family and hopefully some new hobbies.”
Donelon’s surprise announcement comes a month after lawmakers approved the allocation of $45 million for an incentive program aimed at attracting more insurers to Louisiana. In recent years, a dozen homeowners insurance companies fled the state and another dozen went bankrupt after Hurricanes Delta, Laura, Zeta and Ida. The destruction from the storms resulted in 800,000 insurance claims totaling $22 billion.
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As a result, thousands of residents have been forced to turn to Louisiana Citizens Property Insurance Corporation — the state-run insurer, which is the most expensive option. The company currently has 120,000 home policies — compared to 41,000 policies in 2021 — and the average annual property insurance premium has increased to $4,400. According to the latest data from the Insurance Information Institute, the average annual premium for property insurance nationwide in 2019 was $1,272.
Qualifying companies receive grants ranging from $2 million to $10 million under the government incentive program. In return, these insurers must provide 100% matching funds for the subsidy. In addition, the new premiums that must be subscribed by each company are at least double the total amount.
Donelon announced on Tuesday that nine companies have applied for the program. In total, the companies are asking for $61 million in grants to do business. Donelon said if all companies were allowed, they would receive less amounts than requested to reach the $45 million currently available unless lawmakers increase the funds allocated to the program.
Applications are currently being examined by the state insurance office. But if all of the program’s funds are allocated, about 40,000 policyholders could opt out of the state insurer.
“If all goes well, they should be able to start writing new policies as early as next month,” Donelon said.
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While the program — which is a revival of the program created in 2006 when insurers packed up and left the market in droves after Hurricanes Katrina and Rita — has been described as a “band-aid solution,” Donelon said it was necessary to protect people from losing their home.
However, he has acknowledged that there is still work to be done during the Louisiana legislative session in April to find long-term insurance solutions. In fact, the commissioner said that part of the reason he will not seek re-election is “to remove politics from the extremely important upcoming meeting, which will discuss “many important issues affecting our state and the future of our state’s property insurance market concern, to be discussed”.
Donelon, who is in his fourth term as commissioner, said he has no successor in mind. Tim Temple – a wealthy insurance executive from Baton Rouge – has made an offer for the position. Temple, a Republican, lost to Donelon in 2019 by a 6% margin of the vote.
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