[StBernard] La. Senate overhauls Blanco's $100 million insurance plan

[Westley Annis]

La. Senate overhauls Blanco's $100 million insurance plan

BATON ROUGE, La. -- If Gov. Kathleen Blanco is offering $100 million to
insurance companies, then homeowners deserve a $93 million tax break on the
premiums they've paid since the 2005 hurricanes, the Senate voted Monday.


Senators approved Blanco's financial incentive plan, but it must return to
the House because the bill is now in a vastly different form than when it
passed the House. Along with the tax break, senators also approved new
provisions that would give the Legislature oversight of the grants to
insurers.

A handful of senators were skeptical about the central theory behind
Blanco's plan: that private insurers will start doing business in south
Louisiana _ writing policies for properties at high risk of hurricane damage
_ in exchange for grants from the state of up to $10 million.

"This is a $100 million giveaway to insurance companies," said Sen. Rob
Marionneaux, D-Livonia.

Called the "Insure Louisiana Incentive Program," the plan was devised by the
pro-business Louisiana Association of Business and Industry and championed
by Insurance Commissioner Jim Donelon. Donelon has argued the grants will
lure enough insurance companies to Louisiana that competition will rise and
the cost of insurance will drop.

Sen. Walter Boasso, D-Arabi, amended the measure to add an income tax credit
for the 2007 tax year for homeowners: they would get credit for a portion of
their insurance premiums since 2005. Boasso said the tax credit would cost
the state an estimated $93 million in lost revenue.

The Senate also approved an amendment that ties the plan to another bill,
related to the state-backed Louisiana Citizens Insurance Corp., by Sen.
James David Cain, R-Dry Creek. The amendment delays the issuance of the
grants to insurers until Cain's plan takes place: all policies now covered
by Citizens must be offered at auction to private insurance companies.

The Blanco-Donelon plan would move forward if the state gets no reasonable
offers for the Citizens policies.

The Senate also approved a bill by Rep. Jean-Paul Morrell, D-New Orleans,
that could reduce rates for Citizens policyholders in coastal areas. The
bill was amended by Sen. Nick Gautreaux, D-Meaux, to eliminate for
homeowners in those parishes a mandatory 10 percent markup that all Citizens
policies carry. Morrell's bill also must return to the House for approval of
changes.

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On the Net:

House Bill 678 is at http://legis.state.la.us/

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