3-Year Rule Repeal in La. Shifts Risk to Policyholders

Public Policy & Regulation attorney Ronnie Johnson was interviewed for a Law360 article examining the repeal of Louisiana's three-year rule and its effect on the state's home insurance market. The rule prevented homeowners insurance companies from canceling, refusing to renew or raising deductibles for policies that had been active for more than three years. Now, insurers can non-renew up to five percent of these policies, along with raising deductibles subject to the Louisiana insurance commissioner's approval. Mr. Johnson, who previously served as the state's deputy insurance commissioner, explained that Louisiana was the only state with this kind of law in place, and that one of the potential reasons for repealing it would be to attract investors from the insurance and reinsurance industry and thus increase competition in the market.

"Anything that makes a state unique or imposes a burden upon the insurance industry tends [to impart] some reluctance for insurers to want to commit capital or write business," he said, adding that though concerns about shifting risks to policyholders are valid, providers still have an obligation to make sure their rates are appropriate and non-discriminatory.

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