We’ve been hearing the word “consumer” pretty regularly from the elected officials who, amid an existential insurance crisis for Louisiana homeowners, are working to give the companies that might deign to serve those consumers pretty much everything on their wish lists, from friendlier rules on lawsuits to the ability to raise rates and drop customers more easily.
The idea behind the lopsidedly pro-industry package moving rapidly through the Legislature, with strong support from new Insurance Commissioner Tim Temple, is that deregulation and consumer advocacy go hand in hand.
As Temple has repeatedly explained, his theory of the case is that insurers don’t want to do business in the state because the political and regulatory conditions aren’t to their liking. Changing those conditions will encourage more of them to write policies in Louisiana’s environmentally vulnerable coastal areas, the theory goes. And that will create a competitive marketplace that would — fingers crossed — lead to lower future rates.
As Temple put it soon after winning the office when his only opponent dropped out: “I will maintain that the best consumer protection that you and I can have is choice.”
That’s one way of seeing things, and given that it’s the prevailing view in the commissioner’s office and the Republican supermajority Legislature, we’ll eventually find out whether it’s right.
But before we get to “eventually,” homeowners are suffering in the here and now.
They’re facing astronomical premiums that in some cases eclipse their mortgage payments, which can put buying or staying in a home simply out of reach. And with few or no good options — none of the “choice” that Temple and like-minded lawmakers espouse — more than 133,000 are stuck relying on Citizens, the state’s insurer of last resort. That’s an increase of nearly 250% since Hurricane Ida hit in 2021.
By design, this option doesn’t come cheap. Citizens is mandated to charge customers 10% more than the actuarial or market rate, a requirement that’s aimed at making it less attractive than private coverage.
But what if there’s no private coverage to be had? That’s what House Bill 524 by state Rep. Matthew Willard, D-New Orleans, aimed to address.
Willard proposed suspending the Citizens surcharge for two years. He argued that the industry-friendly policies that will surely become law will, in the short term, “be devastating for people below I-10.”
“Do we want to penalize them for staying on Citizens because the state failed to provide them with a competitive market?” Willard asked.
In an attempt to win over some fence-straddling lawmakers, he agreed to an amendment cutting the 10% upcharge in half instead of pausing it entirely.
No dice. The House Insurance Committee deadlocked 9-9, meaning that the measure died.
Putting a heavy finger on the scales was Temple’s office, which trotted out the usual free-market rhetoric. Deputy Insurance Commissioner Barrow Peacock, a former Republican state senator, argued that reducing or waiving the surcharge would incentivize customers to stay on Citizens, where the average premium since Ida has jumped from $2,800 a year to $4,610.
“We do not want to encourage people to stay in Citizens,” Peacock said.
As if most people there have any options at all.
We all get that the political powers that be favor a competitive market. In an ideal world, surely most people do too.
But while they’re showing acute sensitivity to industry concerns, moves like this suggest they’re still tone-deaf at best and utterly insensitive at worst to what consumers are facing right now.
Adopting one relatively minor and not terribly costly bill — $25 million in its original form, half that as amended — would have signaled that they actually get that there's a crisis. It would have demonstrated that they’re not so caught up in their theory of the case that they can’t see what’s right in front of them, that the people they represent need relief — particularly if the solutions being discussed are unlikely to do much in the short-term.
It would have served as an acknowledgment of the obvious: That penalizing people for making the only choice they have is, on its face, simply unfair.
Asking consumers to believe that giving insurers everything they want is really about helping them is a hard enough sell.
But refusing to pair all that pro-industry legislation with just this one break? It really makes you wonder whether the folks making policy decisions are listening to consumers at all.