Louisiana Department of Insurance
MONTHLY REPORT
Volume 12, Issue 12
December 2012


Members

Commissioner Jim Donelon
Theodore "Ted" Haik, Jr., Chair
Jeff Albright, Vice Chair

Raymond J. Aleman, Sr.
Lee Ann Alexander
J.E. Brignac, Jr.
Paul Buffone
Stephen F. Campbell
Anne Cassity
Sheriff Greg Champagne
Representative Greg Cromer

Manuel DePascual (Alternate)
Louis G. Fey, Jr.
Michael Guy
Lance "Wes" Hataway
Ron Henderson
Senator Eric LaFleur
Scott Landry
LTC John A. LeBlanc
Ann Metrailer (Alternate)
Robert Moorman
Senator Dan "Blade" Morrish
Chris Roy, Jr.
Representative Kirk Talbot
Earl Taylor


Staff


Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

Amy Deason, Administrative Assist./Research Analyst

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LOUISIANA CITIZENS UPDATE

Sixth Round of Citizens Depopulation a Success

Louisiana Insurance Commissioner Jim Donelon has announced that Louisiana Citizens Property Insurance Corporation (Citizens) has completed a sixth round of depopulation with significant results. 6,877 residential policies are being transferred to the private insurance market through four companies, thereby dropping Citizens policy count to below 100,000 residential policies and to around 105,000 total policies, including commercial. With this annual round of policy “take-outs,” Citizens is predicted to have dropped to an estimated 3.8 percent homeowners market share, ranking it eighth in market share size in Louisiana.

Those whose policies were transferred to the private insurance market with this Depopulation Program will benefit by now having lower premiums since as the insurer of last resort Citizens’ rates are required by law to be the highest rate in each parish. All Louisiana property owners benefit from this reduction of Citizens policies as it reduces the need for future assessments charged to property insurance consumers in the event of another Katrina-level event.

The four companies successfully making offers to write homeowners policies currently written by Citizens are Access Home Insurance Company, Centauri Specialty Insurance Company, Lighthouse Property Insurance Corporation and Maison Insurance Company.

“I am grateful to the four companies removing policies from Citizens with this depopulation cycle, including Maison Insurance, the company that is new to our market,” said Commissioner Donelon. “The increased competition we are currently experiencing along the coastal parishes is a win-win scenario for all Louisiana property insurance policyholders.”

Citizens Board Votes for Structural Changes to Lower Costs

At a special meeting earlier this month the Citizens’ board voted to move the underwriting and issuing of policies and the adjusting and handling of all non-catastrophe claims in-house.  Citizens has relied primarily on service providers to perform these duties. The transition will begin April 1st and is expected to produce savings of more than $6 million annually. Part of the savings is expected to come from lower reinsurance costs since Citizens has been paying a surcharge for its above average loss adjustment expenses.

These cost-saving efficiencies were recommended by Citizens’ executives after careful study and thoroughly debated by Citizens’ board members over several presentations and meetings. All expressed appreciation for the excellent work the service providers have performed since the troubled times of hurricanes Katrina and Rita in 2005. Several board members expressed hesitance to change a system that is now working so well.

The board voted 6 to 2 to adopt the in-house system proposal that was presented by Citizens’ Chief Claims Officer Quin Netzel and Chief Operating Officer Vijay Ramachadran.


LPCIC Meeting

The Louisiana Property and Casualty Insurance Commission (LPCIC) met last month at the Department of Insurance, with Jeff Albright as acting chairman.  Mr. Albright recognized and welcomed two new commission members, Ron Henderson, Deputy Commissioner of Consumer Advocacy and Steve Campbell, Commissioner of the Office of Motor Vehicles. 

Michael F. Park, Chief- Task Force Hope, US Army Corps of Engineers gave an overview of the Greater New Orleans Hurricane and Storm Damage Risk Reduction System (HSDRRS).  He explained that the mission of the HSDRRS was to repair the damages caused by Hurricane Katrina and then to strengthen and improve the system to provide 100-year level of risk reduction capable of withstanding the effects of a storm having a one percent chance of occurring each year.

This has been largely accomplished with major improvements including improved-design and higher flood walls, a Lake Borgne surge barrier, Seabrook gate complex, and West Closure complex that includes the world’s largest drainage pump.

Ben McGee, Supervisory Hydrologist, US Geological Survey- Louisiana, gave a presentation on Monitoring Hurricane Inland Storm Surge.  Using information and statistics collected from the 2005 hurricanes, storm surge sensors were designed and deployed to proactively record and document pertinent information about each site, including water level, barometric or water pressure, temperature, date and time.  The data helps determine important factors such as peak elevation, high water marks, the rates of rise and fall of floodwaters and tidal cycles during and after storms.

Holiday Responsibilities

During this time of seasonal festivities, knowledge could act as a handy preventative measure for the homeowner who chooses to host a holiday gathering.

According to the Independent Insurance Agents & Brokers of America, even the best intentioned homeowner hosting a “holiday get-to-together” can be liable for their guests.  Thus hosts should be aware that if someone drives drunk or becomes sick after consuming food at the holiday party, they could actually be liable.   In many states, hosts can be liable for third-party injuries if a tipsy guest is involved in a car crash after leaving the party.

The following are useful tips for homeowners who have seasonal festivities, as well as companies who serve up a holiday bash for their employees.

Know your current state laws and liability. 

  • Check your homeowners or renters policy to see if you are adequately covered, should an accident or illness occur during or directly after your party.

If in doubt, throw it out.

  • Order food from a trusted source and don’t serve anything you are suspicious of being undercooked or spoiled.
  • The FDA offers a comprehensible food-safety guide on preparing and storing dishes.  This may be found on their website, www.fda.gov.

Don’t get loose with the booze.

  • If a guest begins to show signs of intoxication ask for his or her keys and offer them non-alcoholic refreshment. 
  • For larger gatherings, consider hiring a bouncer or an off-duty officer to check guests for sobriety as they leave.
  • Always be vigilant to make sure no minors sneak a drink under your watch.

Take the Party outside.

  • Budget permitting, host your party at a bar or restaurant that owns a liquor license to decrease your liability. 

The Louisiana Property and Casualty Insurance Commission
Members and Staff wish you
a Merry Christmas and a Happy New Year!