Louisiana’s P&C Insurance Regulatory Environment Improves to ‘B-’ Rating, Scores High Marks in Regulatory Clarity and Rate Regulation

In a state-by-state survey of property and casualty insurance regulatory environments, Louisiana earns a ‘B-’ because of its regulatory clarity and above average rate regulation.
As noted in a related article, the Heartland Institute, a national nonprofit research and education organization, has issued its 2011 Property and Casualty Insurance Report Card (available in PDF), a state-by-state analysis of insurance regulatory burden.[1]

The report ranked the Louisiana P&C regulatory environment as 25th overall with a 'B-’ grade.
The report ranked the property and casualty insurance regulatory environment in the state of Louisiana as 25th overall and assigned it a letter grade of ‘B-’.

Louisiana’s overall score was a -4 based in large part on negative markets in the report's grading categories of Residual Homeowners Insurance Market (-6) and Automobile Market Concentration (-5). The report singled out Louisiana and Florida for being the only two states running full-fledged property insurance companies as state agencies.

Louisiana's score was bolstered by generally clear and consistent regulatory rules, and above average rate regulation.
On the positive side, Louisiana rated the top score in the Regulatory Clarity analysis factor, indicating that Louisiana has consistent and clear regulatory rules. Louisiana was also rated Above Average in rate regulation by the report, indicating that Louisiana allows market forces to play a leading role in the setting of insurance rates.

The report praised the state’s ‘market-freeing’ efforts, noting that ‘Louisiana largely succeeded in removing from its publicly run Citizens Property Insurance Corporation nearly all of the policies (in net) that it had added in the wake of Hurricane Katrina.’

Louisiana has generally moved its insurance regulation in positive directions, according to the report, including the continued evolution of the coastal insurance market in the state.

Overall, the report signals improvement in the Louisiana property and casualty regulatory environment.
Overall, the report signals improvement in the Louisiana property and casualty regulatory environment. Louisiana was given an ‘F-’ in 2009 and a ‘D’ in 2008, but in 2010, Louisiana was not graded because the Heartland Institute recognized that its methodology and measures were not fair to Louisiana because they did not adequately adjust for the negative market effects of Hurricane Katrina and its aftermath, natural events outside the regulatory system.

1. See also the Heartland Institute's article regarding the report, written by Eli Lehrer, Vice President of Heartland.

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