February 24th 2023
Louisiana is taking a page out of Florida’s playbook with a special legislative session to address property insurance concerns and to combat the upward trend of carrier insolvency in the state due to the abundance of claims filed during the 2020 and 2021 hurricane seasons. Property insurers paid a reported $18.4 billion in claims as of June 30, 2022. Between July 2021 and September 2022, at least 11 insurers in the state that wrote homeowners coverage have gone insolvent.
Louisiana lawmakers have, as a result, passed a bill that would allocate $45 million in excess funds to a newly created incentive program, hoping to attract more insurance carriers to Louisiana. The “Insure Louisiana Incentive Fund” created by Act 754 was passed during the 2022 regular session to award qualifying new carriers grants between $2 million and $10 million, with the caveat that those carriers provide 100% matching funds for the grant they receive and the new premium required to be written by each company is at least two times that total amount. However, the funding has not yet been allocated.
Louisiana Insurance Commissioner Jim Donelon expressed his concern that the allocation of funds could not wait until April, and requested a special legislative session. Earlier this month, during that special session, he faced a barrage of questions from both House and Senate leaders not only regarding the funds but also his plans for turning things around.
That’s where Merlinos & Associates – a Davies Company comes in. On several occasions over the course of a few days, Donelon explained to legislators that Merlinos & Associates, a nationally recognized actuarial firm, is making a substantial contribution to changing course. He explained when asked by Representatives Jordan, Frieman, and Garofalo during the February 1st legislative session that Merlinos & Associates was hired six months ago to enhance the state’s oversight capabilities. He was also asked by Representative Carter about the state’s reinsurance program and solvency requirements to which he detailed the services being provided by Merlinos & Associates again.
During the next day’s Senate Finance Committee meeting, when Senator Jackson asked about how the Commissioner expects to improve insolvency monitoring, he referred back to Merlinos & Associates.
During the final day of the special session and the Senate hearings, Senator Barrow asked Senate Insurance Chair Kirk Talbot about oversight measures being put into place and the Senator explained that Merlinos & Associates had been hired for just that reason.
The Senate approved the House-passed bill 37-1 that afternoon to fund the previously approved incentive plan. It then went back to the House for quick final approval of Senate amendments.
Merlinos & Associates has provided a variety of actuarial services to the Louisiana Department of Insurance over the last 10 years. Those services include: