Louisiana Citizens Property Insurance, the state-sponsored insurer of last resort, has reported itself to be in a strong financial position after enacting a proactive reinsurance strategy and leveraging models to select polices for depopulation.
Insurance Commissioner Jim Donelon noted how Citizens, which covers properties that the private insurance industry won’t, is now in its 14th round of depopulation, an organized process through which selected policies are made available to regular insurance companies.
Meanwhile, despite three hurricanes and two tropical storms hitting Louisiana during the 2020 season, the company has reported no uptick in home or business owners seeking coverage, a sign of health in the local insurance market.
“By enacting a proactive reinsurance strategy and using modeling to select policies for depopulation, Citizens is in a strong financial position and providing stability to the homeowners market during a turbulent time,” said Commissioner Donelon.
“Despite the multiple hurricanes that hit the Louisiana coast last year, Citizens is in a great place to weather these financial storms and continue to support private sector competition in the property insurance marketplace.”
During the annual depopulation process, Citizens opens its book of business and offers to transfer policies to the private market.
Moving policies to private insurers results in lower premiums for policyholders and reduces the chances that all property insurance consumers across the state could face assessments if Citizens exceeds its ability to pay claims in a future storm.
In this record storm season, Citizens has received over 7,174 claims from Cristobal, Laura, Sally, Delta and Zeta totaling $86.7 million in claims payments through Jan 15, 2021.
Citizens estimates that it will ultimately receive 8,000 claims with losses totaling $97 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 as reinsurance, or insurance for insurance companies, will cover the rest.