Homeowners insured by traditional insurance companies will pay $54 on average next year on their insurance policies to cover bond payments being made by state-backed Louisiana Citizens Property Insurance Corp., which had to borrow nearly $1 billion to pay claims from hurricanes Katrina and Rita.
Citizens is the state’s insurer of last resort, covering homeowners who can’t get coverage anywhere else. The board voted on July 12 to impose a 3.74 percent assessment on all commercial and personal policyholders in the state starting Jan. 1.
The fee is paid by all commercial and personal property policyholders — not just those insured by Citizens — to help pay off nearly $1 billion in bonds sold in 2006 to help the company pay claims after the 2005 hurricanes.
The assessment can be claimed as a credit on the state income tax or by filing proof of payment and appropriate forms available from the Department of Insurance or the Department of Revenue.
Louisiana Citizens’ Chief Financial Officer Steve Cottrell said the fee is less than the 2012 assessment of 3.9 percent. It has been around 4 percent for the past few years.
“It started out at 5 percent and has dropped every year since” 2006, Cottrell said.
The lowered assessment has come from bond refinancing at lower interest rates and paying off some of the debt, Cottrell said.
He said about $2.3 billion in premiums will be subject to the assessment starting Jan. 1. The cost of the bonds’ debt service next year is expected to be about $85.5 million, Cottrell said.
Cottrell said that Citizens has an estimated $850 million in bonds outstanding. All bonds must mature by 2026.