Louisiana is preparing to implement a rule allowing insurance carriers to non-renew or cancel up to 5% of homeowners’ policies in a parish that have been in force for three years, according to a report from AM Best.
Insurance Commissioner Tim Temple said the measure is intended to attract more carriers to the state and stabilize rents. Temple has been pushing for key reforms which he said are necessary to stabilize the state’s challenging home and auto insurance markets.
The Louisiana Department of Insurance will hold a public hearing on March 28 to discuss the rule's implementation. The meeting will address clarifications, including the inclusion of mobile homes in the three-year rule, how the department will define a concentration of non-renewals, and data submission requirements for carriers. The rule was signed into law in May 2024.
Temple said insurers and reinsurers have expressed concerns that the existing restrictions are a barrier to writing and investing 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.”
Temple also said lifting the cancelation and non-renewal restrictions will help carriers manage risk. Lawmakers set the 5% threshold as a consumer protection measure to prevent an outsized impact in any one area. Carriers may request approval to exceed the 5% limit, but Temple said regulators will closely review such requests.
“I’ll be looking for exceptional circumstances before approving anything over 5%,” Temple said, adding that a carrier with a high concentration of policies in a particular area could qualify for an exception if that concentration affects the company’s financial health or solvency.
The rule's data submission requirements were also revised, replacing the use of maps with direct data reporting from carriers. Temple said this change was made to improve consistency and provide regulators with more useful information to assess non-renewal concentrations.
According to an Insurance Information Institute report, the state of Louisiana remains one of the least affordable states for personal auto and homeowners’ insurance, with the average annual expenditure for auto and homeowners’ insurance reaching $1,588 and $2,178, respectively.
