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.
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
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.
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.”
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,