In a shift, Louisiana Republicans agree to reduce Citizens insurance rates. Here's how. (2024)

Customers of Louisiana’s insurer of last resort, Citizens, may soon get a small break in their property insurance premiums, if lawmakers agree to legislation that would suspend the 10% surcharge for customers in the coastal part of the state.

Republican leaders earlier in the session dismissed the idea of providing a break on Citizens premiums. But they agreed Tuesday to amendments on a bill by Sen. Kirk Talbot, R-River Ridge, to suspend the higher premiums for Citizens customers entirely in a dozen coastal parishes. Most of Citizens' policies are concentrated in the coastal zone. Customers in the rest of the state would pay 5% over the private market, down from 10% in current law.

The bill must be approved by the full House and Senate and win Gov. Jeff Landry's signature to become law.

The move comes after Landry signed a package of bills championed by Insurance Commissioner Tim Temple that would loosen regulations on insurers, making it easier to drop policyholders and raise rates -- a strategy that a recent poll commissioned by The Times-Picayune | The Advocate found is unpopular.

The amendments Tuesday revived a bill by Rep. Matthew Willard, D-New Orleans, that Republicans rejected earlier in the legislative session. They represent a change in strategy for Temple and Republican lawmakers, who up until now have embraced a pro-industry agenda, turning back efforts to deliver direct rate decreases or require discounts for people who build stronger roofs.

In April, when the same House Insurance Committee rejected Willard’s effort to suspend the Citizens surcharge, Temple’s office said it was opposed to the bill because it favored a private market approach, and didn’t want to encourage people to stay on Citizens.

At the time, Willard argued that Temple’s package, especially the bill to allow insurers to drop more policyholders, would force more people onto the rolls of Citizens. Those people would then have to pay higher premiums for years, even if Temple's strategy works in the long term, he said.

The reduction of the 10% surcharge is slated to last for three years. But Talbot said he would reevaluate the law each year, suggesting lawmakers could undo it if they feel it is hurting efforts to attract private insurers. The dozen parishes that would have the 10% surcharge suspended entirely are Orleans, Jefferson, St. Tammany, Plaquemines, St. Bernard, St. Mary, St. Tammany, Terrebonne, Vermillion, Calcasieu, Cameron and Iberia. The rest of the state would see the charge reduced from 10% to 5%.

“It will cost Citizens money,” Talbot said.

The bill would also limit the amount of damages people can get when they sue Citizens. Talbot hoped to ban all bad-faith penalties for Citizens, but agreed to a compromise that limits the damages to the policy limit. Republicans have sought to limit lawsuits against insurers for years, arguing frivolous lawsuits are driving up insurance rates for everyone. Plaintiffs attorneys generally oppose the efforts, saying insurers will take advantage of homeowners who file real claims.

Louisiana residents, many of whom are being priced out of their homes by staggering premium increases, have listed insurance as among their top issues. After hurricanes in 2020 and 2021, a dozen insurers went bankrupt, others retreated from the state and Louisiana joined other climate-risk states like Florida in California in facing dramatically higher premiums and a lack of options in the private market.

Editor's note: This story has been updated to correct the parishes that would see the 10% surcharge suspended entirely. The bill would suspend the surcharge in a dozen coastal parishes, not all GO Zone parishes. The bill would reduce the surcharge to 5% for the rest of the state.