Jindal backs area senator for Senate president
November 20, 2007November 23
November 23, 2007
U.S. Representative Charlie Melancon (D-Napoleonville) has co-sponsored legislation aimed at reining in rising homeowners’ insurance premiums in Louisiana and the rest of the country.
His bill, called the Homeowners’ Defense Act, creates a mechanism for states to voluntarily bundle their catastrophic risk insurance. The money can then be sold to speculators in the form of bonds.
On Nov. 8, Melancon read letters on the floor of Congress from three local residents complaining about the current high cost of homeowners’ insurance.
Nolan Falgout of Thibodaux wrote, “In the event we do not get a handle on this issue, this will become the next reason why your constituents who have enjoyed growing up in this section of ‘Cajun’ Louisiana will no longer be able to afford to live here.”
Roy Barrios, who lives in Lafourche Parish, wrote that his homeowners’ insurance was cancelled. Now, he will have to pay three times as much for coverage.
Jeanette Tanguis, who lives in Houma, said she wants to leave Louisiana because of the rising premiums, but she cannot for personal reasons.
“My insurance has increased $200 a month,” she said, “and my flood insurance has gone up $200 a year. If I could move, I would move. There’s no incentive to stay in Louisiana with the tax base and the corruption.”
Melancon spokesperson Robin Winchell said the purpose of the bill is to make homeowners’ insurance more affordable.
The bill “pools risk together and bonds it out on the private market,” she said, “transferring the risk from the state to the private market.”
“If there’s a catastrophe, premiums go through the roof,” she said. “This pools (risk) together, sells it as a bond.”
Winchell said that, fortunately, insurance industry people exist who like to gamble.
“Speculators will take the risk there will be no catastrophe,” she said. “If there’s no catastrophe, they’ll make money. If there is one, they’ll lose.”
Sharon Glynn, a Realtor with Latter and Blum in Houma, said that the income she receives from her job “has been drastically reduced.”
Rising homeowners’ insurance premiums have stymied home sales.
“The economy has something to do with it,” she said, “but the majority of it is because homeowners’ insurance rates have doubled, tripled, quadrupled.”
Glynn said some of her customers have been approved for mortgages, but still could not afford to purchase a house because homeowners’ insurance premiums have risen $200 to $300 a month.
Melancon’s bill also creates a National Homeowners’ Insurance Stabilization Program to provide loans to state reinsurance funds after natural disasters occur.
