Coverage Exemption in La. for Hanover Insurance Revoked

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A special coverage exemption granted to Hanover Insurance Co., a major commercial and home insurer in Louisiana, has been revoked.

Hanover had been granted the exemption by former Insurance Commissioner Robert Wooley to a rule freezing insurance coverage to where it was before Hurricane Katrina hit on Aug. 29. Hanover was allowed to tailor commercial and homeowners policies on damaged properties to conditions after the storm.

Insurance Commissioner Jim Donelon revoked the exemption June 8, saying Hanover abused the privileges it was granted.

Hanover had argued that complying with the rule, which prevents insurers from dropping customers or changing their coverage outside of statewide rate filings, would cause it financial harm.

In a letter to Hanover, Donelon said a follow-up check showed that the company would not be harmed by following the rule. The company also failed to make a case-by-case evaluation of policies and applied wide-ranging rate adjustments and increases in deductibles, the letter said.

Hanover said it applied for the exemption to avoid being exposed to unnecessary catastrophic losses. The company said it disagreed with Donelon’s contention that the company had made changes in hurricane deductibles across the board.

“I think that’s really a matter of interpretation. We believe that we complied with all the provisions of the plan,” said company spokesman Michael Buckley.

Customers have until June 30 to request reduced deductibles, Buckley said.

Information from: The Advocate, www.theadvocate.com.