La. Department of Insurance Puts 2 Insurers into Receivership

Hurricane Ida Devastated Towns
AP Photo/Gerald Herbert

BATON ROUGE — Louisiana Insurance Commissioner Jim Donelon said he has placed two financially troubled homeowners insurance companies, Access Home Insurance Co.and State National Fire Insurance Co., into receivership in the 19th Judicial District Court. Donelon said the move is an important step toward the Louisiana Insurance Guaranty Association taking over claim payments, ensuring that most policyholders with pending hurricane claims will get paid.

Donelon has been stating in recent weeks that the Louisiana Department of Insurance has been monitoring closely the solvency of property and casualty insurers operating in Louisiana since Hurricane Laura hit the state in 2020.

He said several insurers are in danger of exhausting their reinsurance coverage and running out of money because of the combination of hurricanes Laura, Delta and Zeta in 2020which cost insurers $10.6 billion — and Hurricane Ida, which is projected to cost insurers between $20 billion and $40 billion. Increasing labor and materials prices because of supply chain disruptions during the pandemic are also a factor.

“We are taking action to protect policyholders,” said Donelon in a press release. “Historic back-to-back storm seasons coupled with the average cost of claims coming in higher than expected because of the pandemic got us to where we are today. The good news is that LIGA can pay up to $500,000 per claim and is ready to handle the influx of claims. We have been actively monitoring market conditions and were prepared to do what needs to be done.”

The failures of homeowners insurers are relatively rare. There were a wave of auto and health insurer insolvencies in the late 1980s and early 1990s, but there have been few problems with solvency since then.

LIGA is available to pay claims if an insurer goes into liquidation, a type of receivership where a company is dissolved. As major companies like State Farm and Allstate retreated after the 2005 storms, the Louisiana Department of Insurance recruited dozens of small regional insurers to the state, reinsured by the international reinsurance market, to keep insurance available and affordable. More than 30 new insurers came to Louisiana, giving property owners choices in the private market.

Access Home Insurance Co. has about 19,697 policies or 0.86% of the homeowners insurance market and $17,684,440 in direct written premium. It has been licensed in Louisiana since 2011.

State National Fire Insurance Co. has about 9,000 policies or 0.14% of the homeowners insurance market and $2,945,198 in direct written premium. It has been licensed in Louisiana since 1981.

Court-appointed receivers are now in charge of operating each company. Both companies are in rehabilitation, a type of receivership aimed at solving problems at the company. Policyholders will receive communications from the court-appointed receiver or their insurance agent about claims and whether the rehabilitation will involve non-renewing policies or transferring them to another insurer.

Policyholders with questions about their insurance coverage, the status of their policies or renewals should contact their insurer or insurance agent. Policyholders with questions about claims can call LIGA at 225-277-7151 or go to https://www.laiga.org/. Policyholders can also contact the Louisiana Department of Insurance at 800-259-5300 or go to ldi.la.gov for assistance.

 

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