‘Insurer of Last Resort’ Only Paying $35M for 2020 Storms
BATON ROUGE – Insurance Commissioner Jim Donelon announced that Louisiana Citizens Property Insurance Corp., the state’s insurer of last resort, will take only a $35 million financial hit from the 2020 hurricane season because of its reinsurance program.
During the record-setting storm season, Citizens has received 6,341 claims from Cristobal, Laura, Sally, Delta and Zeta totaling $75.7 million through Nov. 5, 2020. Citizens estimates that it will ultimately receive 10,278 claims with losses totaling $128.6 million for the 2020 storm season. Damage claims from Hurricane Laura alone will reach $65 million.
But Citizens will only have to pay for $35 million of those claims because reinsurance, or insurance for insurance companies, will cover the rest. Citizens won’t have to absorb the costs of any claims from Delta and Zeta even as it compensates policyholders for their damage.
“I commend Citizens for its smart financial management,” said Insurance Commissioner Jim Donelon. “Citizens’ efforts are paying off for the people of Louisiana, who won’t face any special assessments from this record hurricane season.”
Donelon said that after hurricanes Katrina and Rita, Citizens was plagued by complaints about its claims handling and couldn’t afford to pay its bills. The situation resulted in a $150 million assessment on all Louisiana insurance policies followed by a $900 million bond issue that will continue to cause assessments on all property insurance policies through 2026.
Citizens, which sells property insurance to people and businesses in Louisiana who can’t get coverage in the private market, now has six layers of reinsurance to manage its risk. It met its $35 million deductible during Hurricane Laura, a Category 4 storm that devastated Lake Charles in August.