Released: October 8, 2008

Six insurance companies, some participating in the Insure Louisiana Incentive Program, want to assume 46,898 policies from the Louisiana Citizens Property Insurance Corporation (LA Citizens) by December 1, 2008. However, LA Citizens CEO John Wortman said during a board meeting this week that he expects the final number of policies removed to total around 40,000.

LA Citizens had approximately 165,000 property insurance policies on their books before four insurance companies participating in the Incentive Program and a fifth insurer removed more than 26,000 policies from LA Citizens on June 1, 2008. This latest move to depopulate LA Citizens will reduce the policy count to around 100,000 for the state’s high risk property insurer. Removing nearly 40 percent of the 165,000 LA Citizens policies that were in effect on June 1 means that approximately 65,000 policyholders will not incur the pending LA Citizens rate increase that is required by law on an annual basis.

On November 15, 2008, LA Citizens will send the policies approved for removal to each insurance company. The companies will then send an assumption certificate to each policyholder on their list. Those policyholders will have 30 days to opt out of the assumption if they choose to stay with LA Citizens. On December 1, 2008, the companies will be provided with the details on each policy they have assumed. LA Citizens will maintain the policies until renewal. On March 1, 2009, the companies will begin renewing these policies.

The depopulation of Citizens is a direct result of the Insure Louisiana Incentive Program, created by the Legislature in 2007 to increase the availability of property insurance in Louisiana and to decrease the business written through LA Citizens. The Incentive Program provides matching grants of $2 to $10 million to qualified insurance companies who write new property insurance policies in the state under the strict requirements of the program. Commissioner of Insurance Jim Donelon says that the first round of LA Citizens’ depopulation worked so smoothly that companies asked for this second wave of depopulation to take place this fall.

Commissioner Donelon says the Incentive Program is successful in not only removing policies from LA Citizens but also in increasing the number of insurance policies being written in the voluntary market. “These Incentive Program companies are either now writing or will soon begin writing new insurance policies statewide in addition to the ones being removed from LA Citizens. That’s good news for consumers because we need increased competition in our property insurance market. More choices lead to better prices.”

The insurance policies in this second depopulation wave represent a total exposure of $6.3 billion with an annualized premium of $83 million. LA Citizens has not publicly named the six companies wanting to assume the policies.

Additionally, Commissioner Donelon points out that the Legislature authorized a third round of grant money for the Incentive Program. The application period will run from October 31 until December 31, 2008.

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