Provides for minimum capital and surplus requirements for certain domestic insurers
Impact
The legislation is anticipated to strengthen the financial health and stability of insurance companies operating within the state. By enforcing these minimum surplus levels, the bill aims to ensure that insurers can adequately cover potential claims, thereby providing better protection for policyholders. The increased requirements may also deter financially unstable insurers from offering policies, which could lead to a higher standard of service and reliability in the homeowners' insurance market.
Summary
House Bill 866 aims to establish stricter capital and surplus requirements for domestic insurers involved in writing homeowners' insurance as well as fire and allied lines insurance in Louisiana. The bill sets specific minimum financial thresholds that must be adhered to by insurers, requiring them to maintain paid-in capital and surplus levels at five million dollars by 2026 and ten million dollars by 2031. Additionally, new insurers that apply for a certificate of authority after September 1, 2022, are mandated to have a minimum surplus of ten million dollars right from the start.
Sentiment
Overall sentiment towards HB 866 appears to be positive among proponents who believe that higher capital requirements will enhance consumer protections and mitigate risks associated with homeowners' insurance. Supporters argue that the bill is a necessary step towards a more responsible and robust insurance market. However, some concerns have been raised about the potential for increased insurance premiums, as companies might pass the costs of meeting higher capital requirements onto consumers.
Contention
Notable points of contention surrounding HB 866 include the implications for smaller or new insurers who may struggle to meet the new financial thresholds. Critics of the bill express concerns that such stringent requirements could reduce competition in the insurance market, leading to fewer options for consumers. Additionally, the timing of the requirements, given the impending deadlines in 2026 and 2031, has sparked debate on the ability of insurers to adapt to these changes in a financially feasible manner.
Lowers the minimum capital and surplus requirement for pure captive insurers and removes the prohibition on providing workers' compensation and employee liability insurance. (8/1/12) (EN NO IMPACT See Note)
An Act Establishing Standards To Allow The Insurance Commissioner To Designate Certain Domestic Insurance Companies As Domestic Surplus Lines Insurers.