Property insurance is complicated and expensive, in the words of Louisiana Insurance Commissioner Jim Donelon.
It can be especially complicated in Louisiana, where a dozen insurance companies have gone under due to economic fallout from hurricanes. Donelon joined WWL's Newell Normand this week to explain some tricky things about the current insurance landscape in the state.
One topic that Donelon addressed is the depopulation process at Louisiana Citizens Property Insurance. This corporation was established “to operate certain insurance programs which shall function exclusively as residual market mechanisms to provide essential property insurance for residential and commercial property in the State, solely for applicants who are in good faith entitled, but are unable, to procure insurance through the voluntary market.”
Since 2008, the corporation has been “depopulating” policies – meaning that it allows new or existing private insurance companies to take over the policies.
“Which is in almost every case... significantly cheaper, 20%, 25% than what the policyholder was paying under the statutory structure of citizens policies,” Donelon explained.
However, Normand noted that some policyholders might be anxious due to volatile insurance market in the state. Hurricanes Laura, Delta, Zeta, and Ida caused insurance prices to increase, pushing companies out of business.
“Yes, we've had some failures of companies like the one I had my insurance with, Southern Fidelity,” Donelon acknowledged.
Listen to more of what the insurance commissioner had to say here.
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