Louisiana to GeoVera: Cease Homeowners Policy Non-Renewals

Louisiana Insurance Commissioner Jim Donelon in early July ordered GeoVera Specialty Insurance Co. to stop non-renewing Louisiana homeowners policies in violation of state law.

In a cease and desist order, Donelon told the California surplus lines company that it was in violation of Louisiana statutes that say insurers cannot non-renew policyholders who have been customers for more than three years except in very limited circumstances.

The commissioner has the authority to issue a wide variety of penalties to regulate insurance in the public interest as outlined in the Louisiana Insurance Code. He can refuse to renew, suspend or revoke the certificate of authority or license of an insurer, or in lieu of a suspension or revocation, he can levy a fine of up to $1,000 for each violation up to $100,000 in aggregate.

GeoVera has 30 days to appeal the order.

The action emanates from a consumer complaint to the Louisiana Department of Insurance by a GeoVera customer who had filed a claim over damage from Hurricane Delta. The policyholder received a non-renewal notice from GeoVera, and the company said it was no longer offering homeowners coverage in certain zip codes.

Louisiana laws say homeowners insurers cannot cancel policies that have been in effect for more than three years unless a policyholder fails to pay their premium, commits fraud, files two or more non-Act of God claims within three years, or there is a “material change in risk” in the insured property or the insurer is at risk of becoming insolvent.

These three-year protection laws apply to admitted insurers as well as surplus lines insurers writing homeowners policies. They do not apply to commercial policies.

GeoVera had direct written premium of $33,675,411, which represented 1.64% of the Louisiana homeowners insurance market, in 2020.