The purpose of the $45 million funding bill in Louisiana is to attract insurers to the hurricane-ravaged state.
The state of Louisiana will grant qualified businesses between $2 million and $10 million.
A $45 million funding plan to alleviate rising homeowner insurance rates in hurricane-ravaged Louisiana will be discussed in the state Senate on Friday.
If adopted by lawmakers gathering in a special session, the legislation supported by Insurance Commissioner Jim Donelon would establish an incentive program that would pay grants to qualified insurance companies as an incentive to write policies in the state.
The law was passed by the House with a vote of 90 to 8 during the extraordinary session that began on Monday.
Legislators aimed to conclude the session onFriday.
Senate approval would likely be the last major hurdle for the plan, although the House, which was scheduled to meet later that day, would have to approve any amendments made by the Senate.
The state's insurance issue, comparable to that of Florida, followed two years of severe hurricane seasons in which the state was struck by Delta, Laura, Zeta, and Ida.
As a result of the deluge of claims, a number of insurance companies went bankrupt, whileothers ceased issuing coverage in the state.
Legislators passed the incentive scheme last year but did not fund it adequately, hence the $45 million funding measure.
Under the initiative, eligible enterprises will receive between $2 million and $10 million in grants.
In exchange, these insurers must match the grant's cash dollar-for-dollar.
Donelon stated that ten insurers, including seven already operating in Louisiana, are interested in joining in the scheme.
While the commissioner could not promise that the scheme would reduce premiums, he expressed hope that it would "stabilize" the market.
He added that he expects it will allow approximately 40,000 policyholders to depart Louisiana Citizens, the state's insurer of last choice.
The state-run safety-net insurance firm, which is required to charge 10 percent more than market prices, will soon increase its premiums by 63%.
Louisiana Citizens has 120,000 residential policies.
It will have 41,000 policies in 2021.