The state Department of Insurance has approved a rate increase of 63-percent for customers of the state-run insurer of last resort, Louisiana Citizens. Insurance Commissioner Jim Donelon says it was a necessary decision, as required by state lawn but nevertheless he says it was…
“Extremely painful knowing that over a hundred-thousand people are being burdened with a huge rate increase if they cannot – between now and the time of their renewal – get coverage from a private company.”
By law, citizens’ rates must be 10-percent higher than the private market, so it is already costly. The increase will take effect on January 1st, but Donelon says he hopes to have new insurance companies arranged to offer cheaper coverage to those under Citizens’ protection…
“Before this 63-percent increase impacts the great majority of those 120-thousand Citizens policyholders.”
Donelon says the rate hike is necessary and required by law, so that Citizens can cover the cost of potential disaster claims and the cost of re-insurance (basically insurance for insurers) which is sold on the international market. He says he and his staff will meet with state lawmakers this week about a plan to use surplus DOI money as an incentive fund to attract new companies; a plan that worked after Katrina and Rita hit.
Donelon says, “I am certain that we will have the same success we had after Katrina and Rita in reducing that book of business at Citizens.”
Nearly a dozen insurance companies have either gone out of business or quit covering homes in Louisiana since the hurricane in 2020 and 2021.
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