Private Firms Take Homeowners Policies From Louisiana Citizens
Private insurers are taking more than 26,000 homeowners policies from Louisiana’s state-backed insurance company in return for millions in taxpayer money, Insurance Commissioner Jim Donelon said.
Donelon credited Louisiana’s financial incentive program, which provides public money to private firms that agree to take on policies along the hurricane-prone coast now written by the Louisiana Citizens Property Insurance Corp., the state’s so-called insurer of last resort.
In all, five private firms have taken on 26,595 Citizens policies, Donelon said.
Citizens still has roughly 144,000 homeowners policies around the state, down from about 165,000 in March, according to company records. The company had about 135,000 policies before hurricanes Katrina and Rita struck in 2005, when private firms stopped writing new policies here.
Companies have accepted roughly $39 million in taxpayer money in exchange for taking over Citizens policies, under legislation passed last year. The goal was to reduce the number of policies written by Citizens, while luring more private firms to the state – an effort to heighten competition and lower rates after the 2005 hurricanes.
Citizens remains Louisiana’s third-largest homeowners company, though Donelon said he aims to keep reducing the number of policies it carries.
“It’s our goal to shrink it, make it efficient, make it available, but make it truly the market of last resort, and bring enough competition from the private sector into our market, that our folks won’t have to go there for their coverage,” Donelon said.
Homeowners have the option of staying with Citizens, though Donelon said most who switch will get slightly lower rates.
Insurer Southern Fidelity, of Tallahassee, Fla., was the leader in taking the policies, with 16,010, according to Donelon’s office. Southern Fidelity accepted $7 million in state incentive money, Donelon announced last November.
Jefferson Parish had the most policies taken from Citizens, with 5,470. Orleans had 3,692, St. Tammany 3,682, Iberia 1,286, Vermilion 1,286 and St. Mary 915.
Citizens has been mired in financial and computer troubles since the storms hit, and state audits have found alleged fraud and mismanagement, plus misspending of company money. A federal grand jury in New Orleans is reportedly investigating the company.
The quasi-public company carries over $1 billion in debt stemming from the storms, to be paid off by taxpayers or homeowners for the next 20 years. The firm is just now settling the last of record-keeping troubles that made it impossible to balance the books.