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Regular Session, 2013
SENATE BILL NO. 19
BY SENATOR ALLAIN
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
PROPERTY INSURANCE. Prohibits Citizens Insurance Corporation from assessing rates
in excess of 25% per year without approval from the Senate and House committees on
insurance. (8/1/13)
AN ACT1
To amend and reenact R.S. 22:2303(A), relative to Louisiana Citizens Insurance2
Corporation; to provide with respect to rates, rating plans, and rate rules applicable;3
to provide for limitations on rate increases; and to provide for related matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 22:2303(A) is hereby amended and reenacted to read as follows: 6
ยง2303. Rates, rating plans, and rate rules applicable7
A.(1) As residual markets, the plans made available by the Louisiana Citizens8
Property Insurance Corporation are not intended to offer rates competitive with the9
voluntary market. Rates for policies issued under the Coastal Plan and the FAIR Plan10
shall be set by the governing board of the Louisiana Citizens Property Insurance11
Corporation, adjusted annually, and, subject to the limitation in Paragraph (2) of12
this Subsection, shall exceed by at least ten percent the higher of (a) the actuarially13
justified rate or (b) the highest rates charged among assessable insurers that have a14
minimum of two percent of the total direct written premium in each respective parish15
for that line of business offered as stand-alone coverage in the preceding year, or,16
with respect to personal lines property insurance, excluding wind and hail policies,17 SB NO. 19
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words in boldface type and underscored are additions.
only, (c) the highest rates charged among assessable insurers in each respective1
parish which in the preceding year increased by at least twenty-five additional2
personal lines property insurance policies, excluding wind and hail policies, in such3
parish, the total number of such policies in effect for the parish over the year before.4
Such rates shall include an appropriate catastrophe loading factor and may include5
rules for classification of risks insured hereunder and rate modifications hereof.6
(2) Louisiana Citizens Insurance Corporation shall be prohibited from7
assessing or implementing an annual rate increase for any parish in excess of8
twenty-five percent without approval from the House and Senate committees9
on insurance, acting jointly. The joint meeting shall be held within thirty days10
of the notification from the Citizens board to the committees of the proposed11
rate increase. The chief executive officer and the staff actuary for the12
corporation shall provide testimony at the joint meeting which specifies, by13
parish, the basis and methodology used in determining the proposed rate14
increase. Upon approval by the committees meeting jointly, the commissioner15
may elect to implement the rate increase over a period of two to five years. 16
(2)(3) The method used to determine the highest rates charged among17
assessable insurers that have a minimum of two percent of the total direct written18
premium in each parish and with respect to personal lines property insurance,19
excluding wind and hail policies, only, the highest rates charged among assessable20
insurers in each respective parish which in the preceding year increased by at least21
twenty-five additional personal lines property insurance policies, excluding wind and22
hail policies, in such parish, the total number of such policies in effect for the parish23
over the year before shall be set forth in the annual rate review provided by the24
governing board and shall be documented in the rate filing as required in Subsection25
C of this Section. The chief executive officer of the corporation or his designee shall26
survey all insurers to make the determinations necessary to comply with this Section.27
All insurers shall submit to the chief executive officer of the corporation or his28
designee all information necessary for the corporation to comply with the provisions29 SB NO. 19
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of this Section. All information received by the chief executive officer or his1
designee in response to the survey shall be considered proprietary, privileged, and2
confidential by the chief executive officer, all members of his staff, and all members3
of the board of the corporation. Such information shall be exempt from the public4
records law (R.S. 44:1 et seq.). However, all such information shall be subject to the5
legislative auditor's authority pursuant to R.S. 24:513 et seq. The chief executive6
officer of the corporation or his designee shall execute appropriate confidentiality7
agreements to protect the information provided by assessable insurers, making8
allowance for the information to be provided to the commissioner of insurance as9
part of the corporation's rate filing and to the legislative auditor as provided in this10
Paragraph.11
(3)(4) Prior to determining any such rates, the governing board shall adopt12
such formulas as may be necessary for determining rates. The board may establish13
rating territories as it deems appropriate. Any changes to the rating territories shall14
be approved by the House and Senate committees on insurance, acting jointly.15
* * *16
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Allain (SB 19)
Present law prohibits the plans made available by the Louisiana Citizens Property Insurance
Corporation ("Citizens") from competing with the voluntary market. Further provides that
rates set by the governing board of Citizens shall exceed by at least 10% the higher of the
actuarially justified rate or the highest rates charged among assessable insurers that have a
minimum of 2% of the total direct written premium in each respective parish for that line of
business in the preceding year. With respect to personal lines property insurance, excluding
wind and hail policies, only, present law provides the rates shall be the highest rates charged
among assessable insurers in each respective parish which in the preceding year increased
by at least 25 additional personal lines property insurance policies, excluding wind and hail
policies, in such parish, the total number of such policies in effect for the parish over the
year before.
Proposed law retains present law and adds that the rates set by the governing board of
Citizens shall exceed the highest rates charged among assessable insurers that have a
minimum of 2% of the total direct written premium in each respective parish for that line of
business offered as stand-alone coverage in the preceding year.
Proposed law prohibits Citizens from assessing rate increases in excess of 25% in a single
year without approval of the House and Senate committees on insurance, acting jointly. The SB NO. 19
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
joint meeting shall be held within 30 days of the notification from the Citizens board to the
committees of the proposed rate increase. Further provides that the chief executive officer
and the staff actuary for the corporation shall provide testimony at the joint meeting which
specifies, by parish, the basis and methodology used in determining the proposed rate
increase. Permits the commissioner to implement the rate increase over a period of two to
five years if approved at the joint meeting.
Effective August 1, 2013.
(Amends R.S. 22:2303(A))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill
1. Requires the joint meeting of the House and Senate committees on insurance
to be held within 30 days of the notification from the Citizens board to the
committees of the proposed rate increase.
2. Makes technical changes.
3. Permits the commissioner to implement the rate increase over a period of two
to five years if approved at the joint meeting.