Hanover to Exit Louisiana Homeowners Market, Then Re-Enter

In a move he says will prevent the addition of policies into Louisiana Citizens Property Insurance Corporation’s book of business, Louisiana Insurance Commissioner Jim Donelon has approved an agreement with The Hanover Insurance Group that will keep Hanover’s 14,000 Louisiana’s homeowners insurance customers in the private insurance market.

At a press conference on Feb. 19, Donelon said he has approved a new proposal made by The Hanover Insurance Group to guarantee continued coverage for homeowners policyholders currently insured by The Hanover Insurance Company and Massachusetts Bay Insurance Company.

The Hanover initially filed to withdraw both Massachusetts Bay Insurance Company and The Hanover Insurance Company from the state and shift around 10,000 policyholders to Gulfstream Property and Casualty Company (Gulfstream). Hanover’s third licensed company in Louisiana, Hanover American Insurance, wanted to keep its remaining “preferred” book of business in the state.

Donelon said, however, that Hanover’s initial proposal would have violated the state’s three-year statute which protects homeowners customers that have been on a company’s book of business for three years from being “dumped,” and would have set a bad precedent for other insurers. Under the new agreement, Hanover Insurance Group will withdraw from the state entirely and Hanover American will re-enter.

It is anticipated that ultimately half of the 14,000 affected policyholders will be covered by Hanover American Insurance Company and the other half by Gulfstream.

All new policies will grandfather with the protection they have acquired under the unique Louisiana homeowners consumer protection law that prevents insurers from cancelling or altering coverage for homeowner’s policies that have been in place for three consecutive years except in rare circumstances.

Donelon said at the press conference that Hanover, which has been operating in Louisiana for 100 years, “has been a good corporate citizen and a dominant metro-New Orleans writer.” He said Hanover’s initial request to withdraw came as a surprise because the company’s book of business had actually grown over the previous year.

In addition, Donelon said, Hanover is an active and important player in the small business insurance market in Louisiana. The company intends to continue as an active player in the commercial market in the state.

He said while Hanover attempted to do the right thing by finding a private insurer to take over the policies it wanted to shed, other companies in the same situation might not have been as willing or able to do the same thing.

With the current plan Hanover will downsize from about 45 licensed agents in the state to 15.

This action “will guarantee uninterrupted coverage for 14,000 homeowners in our state who may have otherwise lost their insurance and prevent other companies from dumping tens of thousands of policies into the Citizens book of business,” Donelon said in a statement released by the insurance department.

“Additionally, I am very pleased to welcome Gulfstream into Louisiana as it is a well established company that has been in business for over five years in the Florida market and meets much higher standards than the statutory requirements for writing business in Louisiana.”

Gulfstream was formed in 2004 and began by taking over policies held by Florida’s property insurer of last resort. The company has around 32,000 policyholders at present. The company has the ability to pay around $150 million in claims and that amount would rise to around $200 million with the addition of the Hanover policyholders, the Associated Press previously reported.

Topics Carriers Louisiana New Markets Homeowners