Louisiana is preparing to enact a rule that will permit insurance carriers to choose not to renew or cancel up to 5% of their homeowners’ policies within a parish, provided those policies have been in effect for three years. This action, according to a report from AM Best, is part of a broader effort to attract more insurance providers to the state and stabilize the market.
Insurance Commissioner Tim Temple has been a key proponent of this reform. He believes these revisions are essential to addressing the challenges in Louisiana’s home and auto insurance sectors.
The Louisiana Department of Insurance has scheduled a public hearing for March 28 to discuss the implementation of this rule. The hearing will address several key points, including the inclusion of mobile homes in the three-year rule, how the department will determine a concentration of non-renewals, and the data submission requirements for insurance companies. The rule was officially enacted in May 2024.
Temple stated that both insurers and reinsurers have expressed concerns that existing restrictions have hindered their ability to write and invest in Louisiana. “We are literally the only state in the country, in fact, we’re the only place in the world that has a law like this,” Temple told BestWire. “The goal is to phase it out over a long period of time.” He also indicated that easing the cancellation and non-renewal restrictions would assist carriers in managing risk more effectively.
Lawmakers established the 5% threshold as a consumer protection measure. It’s designed to prevent any single area from experiencing an outsized impact from the rule. Although carriers may request approval to exceed this limit, Temple said regulators will carefully scrutinize such requests. “I’ll be looking for exceptional circumstances before approving anything over 5%,” Temple stated, adding that a company with a high concentration of policies in a specific area might qualify for an exception if that concentration significantly affects the company’s financial health or solvency.
The rule’s data submission requirements have also been updated, replacing the use of maps with direct data reporting from carriers. Temple explained that this change aims to enhance consistency and provide regulators with more useful information to assess non-renewal concentrations. According to a report from the Insurance Information Institute, Louisiana remains one of the least affordable states for both personal auto and homeowners’ insurance. The average yearly expenditure for auto and homeowners’ insurance reaches $1,588 and $2,178, respectively.
