Louisiana Insurance Commissioner Jim Donelon approved a significant rate hike for Louisiana Citizens residential property insurance policies, a move the insurance department blamed on rising costs of reinsurance.
Donelon approved Citizens’ request for a 63% rate increase, which will go into effect on Jan. 1, 2023. The rate increase will not impact current Citizens policyholders until they renew their policy after that date.
“There’s no sugarcoating it — this increase is extremely painful but required by law to make sure Citizens can handle a potential future disaster for its many policyholders,” said Commissioner Jim Donelon. “My staff and I are working with the legislature to attract more insurers to the state through the use of a program that was highly effective following hurricanes Katrina and Rita, which will give Citizens policyholders, and all Louisianans, more and cheaper insurance options in the private market.”
Citizens, the state’s insurer of last resort, has come under stress in the aftermath of six insurers declaring insolvency. Citizens has over 116,000 policies as of September.
Louisiana law requires Citizens’ rate for each of its policy types in each parish to be at least 10% over the highest qualifying market rate or 10% over the actuarial rate, whichever is higher.
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