§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.

            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.