State insurance succeeds in reducing high-risk property pool

In the past four years, almost 70,000 Louisiana property owners have experienced lower insurance premiums, and many of them have better coverage than they had in 2007. That’s because a Department of Insurance plan to “depopulate” Louisiana Citizens Property Insurance Corp., the state’s high-risk pool and insurer of last resort, is “working extremely well,” said Vijay Ramachandran, Citizens’ chief operating officer. “It’s amazing, actually,” Commissioner of Insurance Jim Donelon said. “I would have not thought that after the worst insurance loss in the history of the state we would be back below pre-Katrina levels.” After hurricanes Katrina and Rita in 2005, and Hurricane Gustav in 2008, many mainline insurance companies stopped writing policies in coastal Louisiana and eastward up the Atlantic Coast because of major losses and the threat of future losses. The number of property owners turning to Citizens increased about 50%. By 2008, 174,000 property owners relied on Citizens for coverage. And because state law requires that Citizens must charge at least 10% more than the highest policies in a parish, practically every one of the property owners saw higher insurance bills. With a new reduction next month, Citizens will hold about 105,000 policies, and Ramachandran is looking at more being assumed by private insurers. In 2007, Donelon and Gov. Kathleen Blanco got the Legislature to approve what at the time was considered a controversial move. State government would in effect pay insurance companies to come into Louisiana if they would take over some of Citizens’ policies. Read the full story here.