Last Modified: Wednesday, November 20, 2013 9:00 PM
Citizens Property Insurance Corp., Louisiana’s property insurer of last resort, is continuing to depopulate its policies, which is good news for the taxpayers of the state who are responsible for making up any losses if there is another major disaster. The lighter the load for Citizens, the less exposure for taxpayers.
Private companies could pick up more than 13,000 policies from the state’s insurer of last resort by a 5 p.m. Friday deadline.
As a result, Citizens Property Insurance Corp. will begin 2014 with about 89,000 policies in place, Chief Underwriting Officer Vijay Ramachandran told board members at a recent meeting. Private companies had assumed around 12,500 policies by 1 p.m. Wednesday.
Citizens, which insures homes and commercial properties that private companies will not, has been encouraging private insurers to assume policies in recent years, including using incentives in the past.
For example, Citizens had 167,000 policies in 2007 and whittled that to about 149,000 policies in 2008, 131,000 in 2009 and 120,000 in 2010.
In other action, the Citizens board approved a 2014 budget that includes $2.2 million in labor savings generated by taking claims and underwriting in-house. Chief Financial Officer Steve Cottrell said he was happy to report that the projected savings from that move, which began earlier this year, have already been felt.
If there are no hurricanes in 2014, Citizens expects to finish the year with $75 million in cash — after paying a $40 million class-action settlement involving claims from Hurricanes Katrina and Rita.
Meanwhile, Insurance Commissioner Jim Donelon praised Citizens and Ramachandran for reducing the insurer’s policy count.
“It’s underappreciated by the people of Louisiana, but it’s very important to the people of Louisiana,” Donelon said.
Citizens insures about 3 percent of the property owners in Louisiana, and the state-backed company is required by law to charge more than private insurers, Donelon said. So every Citizens policyholder whose coverage is assumed by a private insurer saves money.
The remaining 97 percent of the state’s property owners also benefit, Donelon said. The smaller Citizens is, the lower the potential claims will be from the next big hurricane.
Citizens had to borrow about $1 billion to pay Katrina claims. Property insurers’ customers were assessed a fee — 15 percent of their premium the first year — to cover that debt. Everybody benefits by lowering the risk of that kind of assessment, Donelon said.
That is good news. Let’s hope, and pray, that 2014 is another hurricane-free year.
This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Mike Jones, Jim Beam, Crystal Stevenson and Donna Price.