Louisiana Citizens’ Policy Count to Drop Below 60K

Louisiana Insurance Commissioner Jim Donelon announced that the total policy count for the state’s property insurer of last resort is set to approach 54,500 with the most recent round of depopulation.

That number represents a significant drop from a high of 174,000 policies on Louisiana Citizens Property Insurance Corporation’s (Citizens) book of business in 2008. It includes both residential and commercial policies, though residential properties represent the bulk of Citizens’ business.

During the depopulation process Citizens opens up its book of business and transfers policies to the private market. According to Citizens, eight companies will receive 10,304 residential policies this year, dropping the personal lines policy count to about 52,500 residential policies. Including commercial policies, Citizens’ total policy count will be around 54,500.

Donelon said the drop in the number of Citizens’ personal lines through the process of depopulation has exceeded expectations.

“We were optimistic that the total policy count would dip below six figures – but to see Citizens reduce its policy count so dramatically in this short amount of time really speaks to the strength of the competition in our state,” said Donelon said in an announcement released by the Louisiana Department of Insurance. He congratulated Chief Executive Officer Richard Newberry, Chief Operating Officer Vijay Ramachandran and the rest of Citizens’ leadership team for the accomplishment.

Of the eight companies participating in this round of depopulation, two companies, Excalibur National Insurance Co. and Spinnaker Insurance Co., are participating for the first time.

Access Home Insurance Co., Capitol Preferred Insurance Co., Maison Insurance Co., Ocean Harbor Casualty Insurance Co., Safepoint Insurance Co., and Southern Fidelity Insurance Co. have all previously participated in depopulation.

Following the latest round of depopulation, Citizens will have an estimated 0.8 percent of the Louisiana homeowners market – down from 9.8 percent in 2008.

While not part of the depopulation process, Citizens’ commercial insurance policies have also been on a sharp decline. In 2013 there were 4,900 commercial policies. That figure has been reduced by more than 50 percent to fewer than 2,200 policies today.

Donelon recently approved a statewide commercial rate reduction submitted by Citizens during its legally required annual rate review to keep those rates noncompetitive.

Although the impact of the filing will vary across parishes, the overall impact is a -5.9 percent rate reduction taking effect Feb. 1, 2017. Earlier this year Donelon approved a statewide personal lines rate cut of -2.4 percent that took effect June 1.

Citizens attributes the rate cuts to added competition in the homeowners and commercial markets with some major insurers implementing rate decreases, as well as reduced reinsurance costs. Citizens’ reinsurance costs have dropped as a result of lower reinsurance prices and fewer policies held by Citizens.

Consumers whose policies are selected for depopulation will be notified by Citizens by letter. Policyholders will have 60 days from the date on the letter to opt out of the assumption and choose to stay with Citizens.

Source: Louisiana Department of Insurance