State Insurance Commissioner Jim Donelon pleaded for a special session to tackle Louisiana's property insurance crisis but faced a flurry of skeptical questions Friday from state lawmakers.
Donelon, appearing before the powerful Joint Legislative Committee on the Budget, said a special session would pave the way for up to seven companies to start writing policies after eight previous ones went out of business, and others quit writing policies, amid a surge of costly hurricanes in recent years.
"There is no doubt that we are in the middle of a crisis and that is why today is so important," said Donelon, a former House member from Metairie himself.
"We need to have a special session as soon as possible," he said.
But House Speaker Clay Schexnayder, R-Gonzales, and Senate President Page Cortez, R-Lafayette, and others peppered Donelon with questions, including how the state would benefit by a special session that could start Jan. 30 rather that grappling with the issue during the regular session that begins April 10.
Gov. John Bel Edwards said this week that legislative sentiment after Donelon's appearance would be a key factor in whether he calls the session, which could be limited to one bill and require less than a week of debate.
Donelon said fast action is needed so insurance companies have time to get their own reinsurance in place before the start of hurricane season June 1.
He also said state action would ease pressure on the Louisiana Citizens Property Insurance Corp., the state-run insurer of last resort.
Donelon said Citizens covers about 125,000 households versus the roughly 65,000 expected and those homeowners face premium hikes of up to 50%.
Critics noted that there are no guarantees on how many firms would re-enter the market and how many policies they would write.
"From what I am hearing right now it is just maybe they will," said Schexnayder, who has been skeptical about any special session since the issue surfaced.
Replied Donelon: "I would say probably."
Cortez, who said earlier this week that he thought a special session was likely, said after Donelon's presentation he has not reached a conclusion on whether a gathering makes sense.
"There are still so many unanswered questions on this topic," Cortez told the commissioner.
Edwards, Schexnayder and Cortez were set to confer after the meeting.
Whether the death of the governor's mother changed that timetable is not clear.
A special session would cost taxpayers about $60,000 per day, officials said.
Donelon is asking that lawmakers put $45 million into an incentive fund enacted by the Legislature in 2022 aimed at reigniting the property insurance marketplace.
Firms would have to put up $1 for each dollar of state aid and would be required to keep operating for five years or return the money to the state.
Donelon also said insurance companies that get state money would face close scrutiny on their solvency.
House Appropriations Committee Chairman Jerome "Zee" Zeringue, R-Houma, said after the meeting he needs more information before taking a stance on a special session.
"Put it this way: I don't think there was anything today that convinced me we should or shouldn't," he said.
Zeringue's House district was among the hardest hit in the state when Hurricane Ida struck in 2021.
Donelon said Louisiana's property insurance market is in its worst shape since hurricanes Katrina and Rita struck the New Orleans and Lake Charles areas in 2005.
He said one reason for the urgency on legislative action is because insurance executives have to travel to London, Zurich and other farflung cities to obtain reinsurance.
"There is no question in my mind that there are companies poised and anxious to do this," he said.
Edwards would have to issue a call by Monday for a special session to begin Jan. 30.
