Panel advances plan to handle Citizens Property Insurance Corps’ funds

• By SARAH CHACKO
• Advocate Capitol News Bureau
• Published: Apr 10, 2008 - Page: 6A - UPDATED: 12:05 a.m.

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A Senate committee approved legislation Wednesday that would create a separate fund to pay off the state insurance company’s debt and eliminate a fee included on policyholders’ bills.

Senate Bill 103, sponsored by Sen. Dan Morrish, R-Jennings and member of the Senate Committee on Insurance, would create a special fund for taxes levied on insurance premiums. The tax revenue currently flows into designated projects before ending up in the state general fund, he said.

Money from the new fund would be used to pay $100 million each year toward the state-run Citizens Property Insurance Corp., which has an annual $80 million debt payment, Morrish said.

All property owners in Louisiana have been assessed surcharges to pay for a $1 billion loan to pay claims against Citizens for storm damages in 2005.

Morrish said by paying off the debt with the tax revenue, Citizens can drop its surcharges. The state would also be able to drop the tax credit it has been giving to those policyholders for the surcharge, he said.

“In my opinion, the fiscal note to the state is zero,” Morrish said.

“You better save that argument for Finance,” said Sen. Troy Hebert, D-Jeanerette, expecting that the bill will be referred to the Senate Finance Committee.

In other business, the committee endorsed a bill, with a 3-2 vote, that would require companies that sell automobile insurance to also offer homeowner’s insurance, if they sell it, to people serving in the military.

Committee members raised concerns that companies would be forced to provide coverage for homes that otherwise would not qualify for policies and result in higher premiums on other policyholders.

Sen. Derrick Shepherd, D-Marrero and sponsor of Senate Bill 61, said the measure does not stipulate the price of the policies, only that they are offered to military personnel.

Morrish said once the Legislature makes an exception for the military, other groups of the population may want a niche of their own.

“I think the answer to that is we’ve already carved out a niche for all of them. We have Citizens,” Morrish said.

Citizens is the state insurer of last resort, available for people who are unable to get policies from private insurance companies.