Louisiana Citizens Sheds Homeowners Policies

Louisiana Citizens Property Insurance Corp. (Citizens) has held a fourth depopulation offering in which 13,500 policies have been assumed into the private insurance market, state Insurance Commissioner Jim Donelon announced.

Citizens, which insures homes and commercial properties that private companies refuse to insure, had its book of business spike to 174,000 in September 2008 following Hurricanes Katrina and Rita. Since that time, Citizens has held three depopulation offerings to the insurance industry. Some private insurers have been enticed by state grants to take over the policies from the state’s insurer of last resort, while other private insurers that haven’t taken part in the incentive program also have assumed policies.

In 2009, the market share of Citizens fell to 6.4 percent of the total Louisiana homeowners market, an amount lower than the Citizens homeowners market share on the day prior to Hurricane Katrina. That share placed Citizens third in terms of size of the market. With the latest removal of 13,500 policies, Citizens total will drop to 119,000 policies and is predicted to have dropped to below a 6 percent market share and rank fifth or sixth in size of market share in the state, the DOI reported. “This decline is further evidence that the homeowners market in Louisiana continues its recovery from Hurricanes Katrina and Rita,” it said in a statement.

The reduction of Citizens policies benefits all property owners by preventing or reducing future assessments that could be charged to all property insurance consumers in Louisiana, the DOI said. Another benefit for Louisiana property owners is that policies taken out of Citizens and written in the private insurance market will be written at lower premiums. This is because the rates charged by Citizens are required by law to be residual or, put another way, the highest rates in a parish, Commissioner Donelon explained. Many policyholders have lowered their premiums by hundreds, even thousands, of dollars after being written by a private insurance company instead of Citizens.

“I am very encouraged by these numbers, and I believe they indicate significant improvement in the recovery of the Louisiana property insurance market,” Donelon said. The reduction in market share of Citizens is a great indicator that the homeowners insurance market, as well as the commercial property insurance market, in Louisiana is rebounding from the severe hit we suffered as a result of Hurricanes Katrina and Rita. On behalf of Louisiana property owners I welcome new companies into the Louisiana market and encourage other companies to join us.”

In the three previous rounds of Citizens depopulation, Citizens saw the following reduction in policy counts: Round one 26,595 policies on June 1, 2008, round two 13,343 policies on Dec. 1, 2008 and round three 3,368 policies on April 1, 2009.

For more information, contact the Louisiana Department of Insurance at 800-259-5300 or www.ldi.state.la.us.

Source: DOI
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