Six insurance companies, some participating in the Insure Louisiana Incentive Program, want to assume 46,898 policies from the Louisiana Citizens Property Insurance Corporation by Dec. 1, 2008. However, Citizens CEO John Wortman said during a recent board meeting that he expects the final number of policies removed to total around 40,000, the Louisiana Department of Insurance reported.
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 Citizens on June 1.
This latest move to depopulate the state’s insurer of last resort will reduce the policy count to around 100,000 for the high risk property insurer. Removing nearly 40 percent of the 165,000 Citizens policies that were in effect on June 1 means that approximately 65,000 policyholders will not incur the pending Citizens 14 percent statewide average rate increase.
On Nov. 15, 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.
Policyholders will have 30 days to opt out of the assumption if they choose to stay with Citizens. On Dec. 1, the companies will be provided with the details on each policy they have assumed.
Citizens will maintain the policies until renewal, which begins March 1.
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 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 Citizens’ depopulation worked so smoothly that companies asked for this second wave of depopulation to take place this fall. Donelon says the Incentive Program is successful in not only removing policies from Citizens but also in increasing the number of insurance policies being written in the voluntary market.
The insurance policies in this second depopulation wave represent a total exposure of $6.3 billion with an annualized premium of $83 million. Citizens has not publicly named the six companies wanting to assume the policies.
Donelon said the Legislature authorized a third round of grant money for the Incentive Program. The application period will run from Oct. 31 until Dec. 31, 2008.
Source: Louisiana Department of Insurance, www.ldi.state.la.us/
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