Last Modified: Friday, July 27, 2012 7:31 PM
Hurricanes Rita and Katrina are like the unwelcome guests that just won’t go away. Louisiana property owners are still paying for those twin natural disasters from 2005.
The state’s insurer of last resort, Louisiana Citizens Property Insurance Corp. is socking it two property owners again with a 3.74 percent assessment on all property insurance premiums in Louisiana next year. Citizens had to borrow $1 billion to pay claims from Hurricane Katrina and the board of directors voted recently to approve the assessment.
For the average homeowner, this will mean paying $54 more on their insurance policy to cover the bond payments.
Citizens Chief Financial Officer Steve Cotrell said the assessment is based on $85.5 million the insurer will pay in 2013 toward retiring the bonds. Citizens provides insurance to property owners who can’t get insurance anywhere else.
Bond debt is paid for by assessments on private insurance companies, which pass those fees along to their policyholders.
Residential and commercial property owners in the state pay a total of about $2.2 billion a year in property insurance premiums, Cotrell said. The assessment is the percentage designed to meet the debt payments.
The 2013 rate is down from this year’s 3.9 percent because Citizens took advantage of lower interest rates to refinance some of the bonds, Cotrell said. When it originally borrowed the money, Citizens was paying 5 percent interest.
Board member James Napper reminded property owners to deduct the Citizens assessment on their Louisiana income tax. But what he didn’t say was the state has made it overly complicated with paper work and red tape to take the exemption.
“I am always amazed that around 40 percent of the people do not do it,” Napper said.
He should not be amazed. That’s how the lawmakers and bureaucrats have designed it. The government gets to keep the unclaimed deductions.
Citizens is also attempting to lessen its wind-and-hail-only policies sold to commercial customers. The board approved measures designed to limit the number of wind-and-hail only policies.
Citizens Chief Executive Officer Dick Robertson said he’s been told that Citizens’ commercial policies are artificially low.
Earlier this year, Citizens raised its homeowners wind-only policies an average of 58 percent. Citizens is require by state law to charge 10 percent more than private insurers. In June, the state Legislature passed a law eliminating the extra 10 percent requirement in a dozen coastal parishes. However, Citizens did not address its commercial wind-only policies. Robertson said the policies have become part of private insurance companies’ marketing campaigns.
There’s no sense in crying over this annual assessment. There are still $850 million in bonds outstanding and all bonds mature by 2026. Louisiana property owners will being paying for those disasters for many more years to come.
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, Ken Stickney, Jim Beam, Dennis Spears, Crystal Stevenson and Donna Price.
Posted By: antone braga On: 7/29/2012
Title: When It Counts
Disaster survivors lack their basic policyholder rights and vital information in their time of need, when they are most vulnerable. We nearly all carry disaster insurance...why shouldn't crucial information reach us before too late in a state of shock? It should, and now it does. www.DisasterPrepared.net/content
Posted By: Jean Istre On: 7/28/2012
Since the LNG Plants in Cameron/ Calcauiseu line has taken up marshes for the water to go but now it leaves it to go higher flooding Burton Shipyard road and surrounding areas. Why isn't a levee to counter put in place for the west side of the channel? Are we from a different country?