Insurer incentive expires

• By TED GRIGGS
• Advocate business writer
• Published: Jan 6, 2009 - Page: 1D - UPDATED: 12:05 a.m.

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A $100 million state program that paid property insurers to do more business in Louisiana expired Wednesday, and the remaining $71 million will be divided among the state’s insured property owners, Insurance Commissioner Jim Donelon said Monday.

Policyholders will receive state checks of around $50 as a result, he said.

The law creating the program requires the remaining money be divided among the state’s property owners, Donelon said.

In exchange for state grants from $2 million to $10 million, insurers agreed to put up a matching amount and use the money to write new business.

Louisiana held three rounds of grant applications, issuing $29 million in grants to five companies during the first round, Donelon said. Two other companies, American Integrity Insurance Co. and Bankers Insurance Co., both of Florida, applied for $5 million apiece during the second round but could not meet the state’s financial requirements.

“The bad news was that there were no takers during the third round,” Donelon said during a meeting of the Baton Rouge Press Club.

American Integrity and Bankers officials had told the Insurance Department they planned to boost their financial positions and reapply during the third round, Donelon said, but that did not happen.

The companies that received grants were Occidental Fire & Casualty, of North Carolina; Companion Property & Casualty Insurance Co., of Columbia, S.C.; ASI Lloyds, of St. Petersburg, Fla.; Imperial Fire & Casualty Insurance Co., of Opelousas; and Southern Fidelity Insurance Co., of Tallahassee, Fla.

During his speech, Donelon repeated plans to push for two pieces of legislation.

The first will force insurers to cover in-hospital care by specialists who aren’t part of a patient’s health insurance network, he said.

The second will mean property owners will only be responsible for one hurricane deductible per hurricane season, rather than one deductible for every storm. Donelon said the hurricane deductible limit will add 1 percent to 2 percent to property owners’ insurance costs. But that is preferable to requiring a property owner to cover thousands of dollars in damages if their property is damaged in more than one storm, he said.

Donelon said some hospitals, which are included in a patient’s health network, use pathologists, radiologists and anesthesiologists who are not part of the same network.

As a result, patients end up paying those physicians out-of-network charges, which are significantly higher than in-network rates, Donelon said. This practice is a problem nationwide, and needs to be fixed.