NEW ORLEANS (WVUE) – As the property insurance crisis continues, Louisiana’s last insurer, Louisiana Citizens Property Insurance Corporation, will seek permission from the state bond commission on Thursday to increase its line of credit after inheriting more policies for due to insurance company failures and departures. .
State Rep. Jerome “Zee” Zeringue, who is a member of the bond committee, says the Legislature will take action to better protect policyholders from insurers.
“Some of them have not even made claims, they have had insurance for decades and the first claim is either being canceled or not being paid or the hesitation and delay in getting the refunds that should be made. able to fix their homes. It’s a problem and I think at some level we have to address that and we will,” said Zeringue.
Citizens CEO Richard Newberry would not go on camera for this story, but he answered questions during a phone call. Newberry said the line of credit has been in place since 2010, and the bond commission approves it on a biennial basis, meaning every two years.
Newberry said Citizens is looking to increase the line of credit to the level of 2013. He said it was $125 million that year when Citizens had 108,000 policies. Further, he said Citizens reduced the credit line to $50 million in 2020 because there were only 35,000 policies at the time.
However, Newberry said as of this week the policies increased to 103,000.
Zeringue believes some insurers were undercapitalized.
“It speaks to the situation we’re in now, but we’re in this situation unfortunately because of the fact that, you know, the insurers themselves either weren’t properly funded or had enough reinsurance to cover these things,” he said.
Newberry said that as the voluntary or private insurance market recovers, Citizens will “depopulate” policies in the private market. He added that the cancellation of the policies is in the hands of the insurance agents and the insured.
Citizen policy levels reached nearly 200,000 after the catastrophic Hurricane Katrina that hit in August 2005 and was followed by another storm.
“We have had as many as 175,000 policies after Katrina-Rita. That’s been our high point,” Newberry said.
And he stressed that the line of credit has never been used before, but is a necessary safety net to bridge the gap between any future deficit of citizens in the regular assessment imposed on property insurers operating in the state.
Insurance Commissioner Jim Donelon says the citizens’ authority is based on state law.
“They have by law as their duty to provide coverage for anyone who cannot be covered in the private sector, their board also has a duty to evaluate every property insurance holder in the state to meet the shortage of citizens, if necessary. “, said Donelon.
Newberry said Citizens has added staff and will continue to do so as needed.
Zeringue is confident that the legislature will act to protect the insured.
“I know that Commissioner Donelon and his staff are working on some things, but there are some legislative issues or ways that we can address this to ensure that we have more accountable parties participating in the insurance market and that they don’t let their customers and the citizens of Louisiana walk away holding the bag,” Zeringue said.
On Tuesday (Aug. 16), Donelon announced that Weston, a Florida insurer with about 10,300 policies in Louisiana was placed into liquidation, which will cause its Louisiana policies to be canceled on September 7. And a press release said United Property & Casualty Insurance Company had its financial stability rating downgraded and some of Louisiana’s 37,000 mortgage-backed policyholders may be forced to find a new insurer.
And there is growing concern about rising insurance premiums, the impact on the real estate market and the overall economy.
“There is no question that the insurance market will completely change the complexion and ability of people to live in coastal Louisiana,” Zeringue said.
Property insurance premiums, as well as flood insurance costs, have increased for many residents.
“Flood insurance in many cases will be more than their mortgage payments on their homes, so they won’t be able to afford to build or rebuild or even buy a home,” Zeringue said.
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