§ 22:2303 — Rates, rating plans, and rate rules applicable

§2303. Rates, rating plans, and rate rules applicable
A.(1) As residual markets, the plans made available by the Louisiana Citizens
Property Insurance Corporation are not intended to offer rates competitive with the voluntary
market. Rates for policies issued under the Coastal Plan and the FAIR Plan shall be set by
the governing board of the Louisiana Citizens Property Insurance Corporation, adjusted
annually, and shall exceed by at least ten percent the higher of (a) the actuarially justified rate
or (b) the highest rates charged among assessable insurers that have a minimum of two
percent of the total direct written premium in each respective parish for that line of business
in the preceding year, or, with respect to personal lines property insurance, excluding wind
and hail policies, only, (c) the highest rates charged among assessable insurers in each
respective parish which in the preceding year increased by at least twenty-five additional
personal lines property insurance policies, excluding wind and hail policies, in such parish,
the total number of such policies in effect for the parish over the year before. Such rates
shall include an appropriate catastrophe loading factor and may include rules for
classification of risks insured hereunder and rate modifications hereof.
(2) The method used to determine the highest rates charged among assessable
insurers that have a minimum of two percent of the total direct written premium in each
parish and with respect to personal lines property insurance, excluding wind and hail
policies, only, the highest rates charged among assessable insurers in each respective parish
which in the preceding year increased by at least twenty-five additional personal lines
property insurance policies, excluding wind and hail policies, in such parish, the total number
of such policies in effect for the parish over the year before shall be set forth in the annual
rate review provided by the governing board and shall be documented in the rate filing as
required in Subsection C of this Section. The chief executive officer of the corporation or
his designee shall survey all insurers to make the determinations necessary to comply with
this Section. All insurers shall submit to the chief executive officer of the corporation or his
designee all information necessary for the corporation to comply with the provisions of this
Section. All information received by the chief executive officer or his designee in response
to the survey shall be considered proprietary, privileged, and confidential by the chief
executive officer, all members of his staff, and all members of the board of the corporation.
Such information shall be exempt from the public records law (R.S. 44:1 et seq.). However,
all such information shall be subject to the legislative auditor's authority pursuant to R.S.
24:513 et seq. The chief executive officer of the corporation or his designee shall execute
appropriate confidentiality agreements to protect the information provided by assessable
insurers, making allowance for the information to be provided to the commissioner of
insurance as part of the corporation's rate filing and to the legislative auditor as provided in
this Paragraph.
(3) Prior to determining any such rates, the governing board shall adopt such
formulas as may be necessary for determining the rates. The board may establish rating
territories as it deems appropriate. Any changes to the rating territories shall be approved by
House and Senate committees on insurance, acting jointly.
(4) When it is deemed necessary to implement a parish-wide average rate increase
in excess of twenty-five percent on wind and hail insurance coverage in any single parish,
the corporation shall notify the House and Senate committees on insurance. Upon such
notification, a hearing may be requested by either committee chairman or by a majority of
the membership of either committee. In the event of a request for a hearing, the House and
Senate committees shall meet jointly. If a joint meeting of the committees is called, the chief
executive officer and the staff or consulting actuary for the corporation shall provide
testimony at the meeting which specifies, by parish, the basis and methodology used in
determining the proposed rate increase.
B. In addition to the rates otherwise determined pursuant to this Section, including
the premium tax provided for in R.S. 22:831, the corporation shall impose and collect an
additional amount equal to the premium tax provided for in R.S. 22:831 to augment the
financial resources of the corporation. Said additional amount equal to the premium tax shall
be designated as a charge accruing to the state of Louisiana, but shall be retained by the
corporation as a state contribution to the corporation for the public purpose as set forth in
R.S. 22:2291.
C. The corporation shall make a rate filing at least once a year for the plans, with the
rates to be effective within twelve months of the previous rate filing's effective date. Nothing
in this Section shall require or permit the corporation to adopt a rate that is inadequate or
unfairly discriminatory under R.S. 22:1451 et seq. Subject to the provisions of Subsections
A and B of this Section, the rates shall be approved by the commissioner of insurance.
D.(1) Notwithstanding the provisions of Paragraph (A)(1) of this Section, until
December 31, 2027, subject to the provisions of Paragraph (3) of this Subsection, rates for
policies issued by the corporation shall not exceed the higher of (a) actuarially justified rates
or (b) the highest rates charged among assessable insurers that have a minimum of two
percent of the total direct written premium in each respective parish for that line of business
in the preceding year, or, with respect to personal lines property insurance, excluding wind
and hail policies, only, (c) the highest rates charged among assessable insurers in each
respective parish which in the preceding year increased by at least twenty-five additional
personal lines property insurance policies, excluding wind and hail policies, in such parish,
the total number of such policies in effect for the parish over the year before, in any
noncompetitive market unless competition resumes. If the corporation is writing more than
fifty percent of the residential property insurance business in a market, including wind- and
hail-only coverages, the board of directors shall report that fact to the commissioner.
Notwithstanding any other provision of law to the contrary, until August 15, 2015, regardless
of whether a competitive market may exist, the ten percent rate in excess of the higher of (a)
the actuarially justified rate or (b) the highest rates charged among assessable insurers that
have a minimum of two percent of the total direct written premium in each respective parish
for that line of business in the preceding year, or, with respect to personal lines property
insurance, excluding wind and hail policies, only, (c) the highest rates charged among
assessable insurers in each respective parish which in the preceding year increased by at least
twenty-five additional personal lines property insurance policies, excluding wind and hail
policies, in such parish, the total number of such policies in effect for the parish over the year
before, as authorized in Subsection A of this Section, shall not apply in St. Mary Parish and
parishes listed in R.S. 40:1730.27(A).
(2) As used in this Subsection, the following definitions shall apply:
(a) "Market" means the interaction between buyers and sellers in the procurement
of a line of insurance in any parish in the state pursuant to provisions in this Subsection.
(b) "Noncompetitive market" means a market subject to a ruling by the
commissioner of insurance that a reasonable degree of competition does not exist.
(3) When the commissioner is informed that the corporation is writing more than
fifty percent of the residential property insurance business in a market, the commissioner
shall determine if a reasonable degree of competition exists within that market. Upon a
finding that a competitive market does not exist, the commissioner shall inform the board of
directors of the corporation.
(4) The board of directors of the corporation shall use the commissioner's findings
in determining the application of its noncompetitive rating structure in the market that has
been determined to be noncompetitive.
(5) The following factors shall be considered by the commissioner in determining
if a reasonable degree of competition exists in a particular line of insurance:
(a) The number of insurers or groups of affiliate insurers providing coverage in the
market.
(b) Measures of market concentration and changes of market concentration over
time.
(c) Ease of entry into the market and the existence of financial or economic barriers
preventing new insurers from entering the market.
(d) The extent to which any insurer or group of affiliated insurers controls all or a
portion of the market.
(e) Whether the total number of companies writing the line of insurance in this state
is sufficient to provide multiple options.
(f) The availability of private insurance coverage to consumers in the market.
(g) The opportunities available to consumers in the market to acquire pricing and
other consumer information.
(h) The number of residential property insurance policies written by the residual
market.
(6)(a) Prior to February first of each year, the commissioner shall report to the House
Committee on Insurance and the Senate Committee on Insurance the percentage of
residential property insurance business in each of the sixty-four parish markets in this state.
If the corporation is writing less than twenty percent of the residential property insurance in
any given parish market, the commissioner may recommend to the committees that the
provisions of this Subsection be legislatively terminated and the provisions of Subsection A
of this Section be reinstated as to that parish market.
(b) The provisions of this Paragraph shall terminate on January 1, 2028.

Legislative History

Acts 2003, No. 1133, §1; Acts 2005, No. 217, §1, eff. June 29, 2005; Acts 2006, No. 787, §1; Acts 2007, No. 420, §1; Acts 2007, No. 459, §4, eff. Jan. 1, 2008; Acts 2008, No. 211, §1; Acts 2008, No. 347, §1; Redesignated from R.S. 22:1430.12 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2009, No. 483, §1; Acts 2012, No. 271, §2; Acts 2013, No. 278, §1; Acts 2024, No. 757, §1, eff. Jan. 1, 2025.