Industry groups are opposing House Bill 672 in the Louisiana House of Representatives, which proposes a state-run catastrophe reinsurance fund backed by state-issued bonds.
The legislation aims to stabilize the state’s property insurance market. Under the bill, the State Bond Commission would issue bonds, and proceeds would be deposited into a dedicated fund in the state treasury.
In return for accessing the program, primary insurers would be required to write more home insurance in higher-risk areas at lower premiums.
The bill presents this approach as an alternative method for property insurers to secure reinsurance by broadening risk exposure across more investors.
However, the Reinsurance Association of America (RAA) argues that such a program would centralize risk in Louisiana rather than disperse it across global markets.
This would reduce market stability and discourage insurer participation, making the program unsustainable.
Jeremy Eisemann, RAA vice president for state government affairs and assistant general counsel, stated that the global private reinsurance market remains effective because it spreads diverse risks worldwide, minimizing the financial impact of any single event. Louisiana’s proposed structure lacks this risk dispersion and instead concentrates exposure.
If there is a hurricane, as this bill specifically alludes to, then all of the risks get impacted all at the same time. It is an adverse effect versus a global, private reinsurance market where there are uncorrelated risks, and the impact is much less.
Jeremy Eisemann, RAA vice president for state government affairs
He warned that in a scenario like a hurricane, as referenced in the bill, all participating insurers would face losses simultaneously, unlike in global markets where unrelated risks balance out the impact.
Eisemann emphasized that diversified risk is central to the strength of global reinsurance. He cited the California Fair Plan, which issued a $1 bn assessment following recent wildfires in Los Angeles, as an example of the dangers of concentrating similar risks in a single region.
What would serve the objective of this legislation is for carriers to do what they are currently doing, and that is working with the private reinsurance market and contracting with reinsurers that are providing this type of solution
Although HB 672 uses the term “catastrophe bond,” Eisemann clarified that the instruments are revenue bonds that function like loans. The bill assigns repayment obligations to the participating insurers, further discouraging their involvement.
He added that requiring insurers to offer lower premiums in high-risk areas while also repaying bond proceeds would make the program unappealing.
Eisemann said the private reinsurance market remains financially strong and willing to write business in Louisiana. According to him, there is no shortage of available capital or interest among reinsurers, reducing the need for a state-backed alternative.
Because insurers are unlikely to benefit financially, Eisemann concluded the program would fail to meet its objectives and is unlikely to gain legislative approval.
He stated that carriers are already addressing market needs by partnering with private reinsurers offering viable solutions.
Although RAA rejects the proposed reinsurance fund, Eisemann said the association supports other efforts to improve affordability and access, especially reforms being led by Insurance Commissioner Tim Temple and Gov. Jeff Landry.
The organization backs proposed tort reforms aimed at reducing litigation costs, which Eisemann believes would directly lower insurance premiums.
He said the state should focus on reducing legal expenses rather than introducing inefficient public systems that would see little demand from insurers.
