NEW ORLEANS (WVUE) – As the home insurance crisis continues to overwhelm Louisiana’s last insurer, Louisiana Citizens Property Insurance Corporation will seek approval from the state’s bond commission Thursday to raise its debt after receiving multiple points from insurance company failures and exits. .
State representative Jerome “Zee” Zeringue, who is a member of the bond commission, says the legislature will take steps to better protect policyholders from insurance companies.
Some of them have never paid, have had insurance for years and the first interest is reduced or not paid or doubts and delays in paying back the money they need. able to repair their homes. It’s a problem and I think on several levels we have to deal with it, and we will,” said Zeringue.
Citizens CEO Richard Newberry would not go on camera for the story, but answered questions in a phone interview. Newberry said the loan process has been in place since 2010 and the bond commission approves it twice a year, meaning every two years.
Newberry said Citizens is asking for an increase in the line of credit in 2013. He said it was $125 million that year when Citizens had 108,000 policies. Further, he said Citizens reduced the debt to $50 million in 2020 because it had 35,000 points at that time.
However, Newberry said that as of this week the process had grown to 103,000.
Zeringue believes that some insurers are underfunded.
“It has to do with the situation we are in now, but we are in this situation unfortunately because you know, the insurers also did not have enough money or had enough insurance to cover these things,” he said.
Newberry said the voluntary or private insurance market will return, Citizens “deregulates” the private market. He added that the cancellation of policies is for the insurers and the insured.
Citizen policies have reached nearly 200,000 since Hurricane Katrina hit in August 2005 and was followed by other hurricanes.
“We’ve been as big as 175,000 plans after Katrina-Rita. That’s been our high water mark,” Newberry said.
And he emphasized that the line of credit has never been used before, but it is a necessary protection to cover the difference between any type of deficit of Citizens who are always assessed on the insurers who work in the government.
Insurance CEO Jim Donelon says Citizens’ rule depends on state law.
“They are responsible for providing assistance to everyone who cannot get help in the private sector, their agency is also responsible for evaluating everyone who has insurance in the government to meet the shortage of Citizens, if necessary,” said Donelon.
Newberry said Citizens has added staff and will continue to do so as needed.
Zeringue is confident that the legislature will act to protect policyholders.
“I know that Commissioner Donelon and his staff are working on other things, but there are some legislative things or ways that we can solve this to make sure that we have more parties that are participating in the insurance market and that they are not leaving their customers. The citizens of Louisiana left with the bag, ” said Zeringue.
On Tuesday (Aug. 16) Donelon announced that the Weston, Florida-based insurer with 10,300 policies in Louisiana was set for bankruptcy which will result in the termination of its Louisiana policy on September 7. Its financial stability was downgraded and some of its 37,000 policyholders in Louisiana those with bad debt may be forced to get new insurance.
And there’s growing concern over the rise in insurance premiums, the impact on the housing market, and the economy as a whole.
“There is no doubt that the insurance market will completely change the landscape and the ability of people to live on the Louisiana coast,” Zeringue said.
Property insurance premiums, as well as flood insurance premiums, have risen for many people.
“Flood insurance is often going to be more than the value of their home, so they can’t build or rebuild or buy a home,” Zeringue said.
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