Donelon worries about potential insurance ‘redline’

“We don’t have resources

better control of reinsurance purchases made each spring until hurricane season begins June 1.”

Jim Donelon

Louisiana Insurance Commissioner

Hurricanes in the past two years could push insurance into the “redline” Louisiana property owner, State Insurance Commissioner Jim Donelon he said on Monday.

“Redlining” is a coding technique that involves resisting risk based on location.

He said Press Club of Baton Rouge he is “very sensitive” to this possibility.

Donelon said he had heard “word of mouth” that reinsurers who provide financial protection to insurance companies were angry about the failed company’s efforts to raise additional funds to pay for Hurricane Frances.

“Frances came in Louisiana unrecognized, but the company is trying to get a second income because of their failure,” he said.

Donelon sees the stormy years of powerful storms – especially Laura and Ida – as being particularly difficult for the loss.

“Having said that, I emphasize that we went five years — 15 years actually with hurricane seasons after Katrina and Rita — and in the last five years, nothing,” he said.

Slower weather kept home prices up just 1 percent over the past five years, until this year they rose a statewide 6.7 percent, led by higher insurance premiums.

Louisiana has been a “bull’s eye” in dealing with hurricanes, he said.

It hit four times more per capita than other countries in the world Gulf Coast region.

Reinsurers paid the full amount $23.7 billion to Laura, Zeta, Delta and Ida over the past year and a half.

Spending that money is difficult,” Donelon said.

“But having said that, they are in a risky business, and the price will definitely go up in terms of the cost of reinsurance, but the companies will come back to that market, without a doubt.”

The operating storms prompted six companies to declare bankruptcy, including three from Louisiana.

All six companies were rated “outstanding” by Demotech, an Ohio-based on financial analysis and industry analysis, he said.

Donelon said he would like to restructure the industry, but his office is unable to do the work.

“We don’t have the money to properly manage the reinsurance purchases that happen every spring until after the hurricane season. June 1,” he said.

All six purchased from the “cat” model, which includes a computer program that causes potential risks and estimates the amount of loss due to those events.

Disaster models include advanced technology, scientific knowledge, engineering methods, and data analysis to predict events and critical situations.

Examples are used to justify prices. They use justifications, which look at age and where the house is located

“The market is not very difficult Baton Rouge like Slidellwhich are very vulnerable and therefore difficult to get help from the private sector,” said Donelon.

Legally, a Office of the Commissioner of Insurance They must check their books at least every five years to read their books and do what is called “Risk-based capital,” which means that the more policies you write, the more money you have to protect policyholders, he said.

“We don’t have resources

better control of reinsurance purchases made each spring until hurricane season begins June 1.”

Jim Donelon

Louisiana Insurance Commissioner