As Louisiana lawmakers and insurance commissioner work to fix the state's home insurance crisis, another policy writer has gone out of business.
So what should customers of United Property and Casualty expect?
"They could end up and probably will end up dealing with LIGA, but they should not worry about their claims," Insurance Commissioner Jim Donelon told WWL's Tommy Tucker.
According to Donelon, customers of United are better off with the Louisiana Insurance Guaranty Association because they have the resources to finish paying their claims. He says LIGA has taken extra steps to be able to cover those costs despite the number of companies that have gone insolvent over the last year.
"They have borrowed money and have issued bonds to pay. They will be able to absorb the 31,000 policies that will leave claims behind from UPC," Donelon said.
Donelon added that United's insolvency is not surprising. In fact, Donelon noted that insurance rating agency Demotech provided a heads up for what was going to come.
"We certainly aware of the past year of their travails starting with when Demotech downgraded them from their A-rating about a year-and-a-half ago," Donelon said.
Donelon said the state of Florida, where the United is based, challenged that downgrade because officials there thought the company had the funds to pay its debts. Eventually, Florida got a court order to allow the company's customers to get insurance elsewhere.
"Florida kept us abreast throughout," Donelon said. "About a year ago, (Florida) put this company in what's called 'solvent runoff.' What that means is: we now concede that it's not going to make it, but we think they have enough resources, including reinsurance, to pay all their debts over a year-long wind down of their obligations."
Donelon also said state leaders will do all they can to keep those United's Louisiana customers from having to buy policies from the state's insurer of last resort.
"I've been getting consistent calls from folks: 'What's going to happen with UPC?'" Donelon said. "I have been telling them, 'Look elsewhere. Get coverage if you can. If not, Citizens is always available.' But we're going to do everything in our power to avoid these 30,000 policies in Louisiana ending up in Citizens."
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