Saturday, March 18, 2023

Cycling insurance subsidies

These little emergency patches to the failed market are going to keep happening. This one is about to happen twice, in fact. 

Donelon said he will ask the legislature to approve more cash for a second round of grants during the regular legislative session set to convene on April 10.

Insurance companies who get grant money have to match the value of the grant dollar-for-dollar and write twice the sum of that amount in premium every year. For example, if one company received a $10 million grant, it would contribute an additional $10 million in surplus funds and be responsible for writing $40 million in premiums every year in south Louisiana parishes.

Donelon noted on Friday that the program was all but a "verbatim repeat" of a grant initiative spearheaded after Hurricanes Katrina and Rita wreaked havoc on the state in 2005. This time, though, insurers are not required to take policies directly from Louisiana Citizens.

Each time the new emergency turns the ratchet, the subsidies only "incentivize" insurers to remain in the market. But they do so at newly increased rates and less favorable terms for policyholders. So the true effect of each rescue plan is just gradual acclimation to ever-worsening circumstances.  

Maybe it should be the job of the democratically elected Insurance Commissioner to figure out a better solution to all of this.  But that seems hard. And, really, who even wants that job anymore?

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