Louisiana Insurance Commissioner limits insurer’s ability to cancel cover as state leads the nation

Louisiana Insurance Commissioner limits insurer’s ability to cancel cover as state leads the nation | Insurance Business America

Louisiana Insurance Commissioner limits insurer’s ability to cancel cover as state leads the nation
With Louisiana a favourite landing place for storms and hurricanes, the Insurance Commissioner is urging residents to take out coverage to insure against any damage that may ensue from the coming wet season.

“All it takes is one to come your way and you are faced with a serious challenge,” Commissioner Jim Donelon emphasized. “Buy a flood insurance policy. It is still the best insurance a property owner can make in any corner of Louisiana.”

At the same time, the commissioner has extended an emergency regulation which limits an insurance company’s prerogative to cancel or terminate policies in the state.

New Orleans City Business reports, “Donelon’s decision is aimed at protecting people whose homes and businesses were damaged by the August flooding across south Louisiana. He says the emergency regulation will give people flexibility in their recovery process.”

This measure will render insurers unable to cancel policies in federally declared disaster areas by dint of a policy holder’s inability to comply with certain provisions, such as the need to have a policy holder live in an insured structure. The move will effectively force insurers to subsidise flood prone clients with premiums from those in areas less certain to be hit.

Meanwhile, Donelon pointed out in a local report that the state has been the beneficiary of the biggest payout from the National Flood Insurance Program since 1978, receiving $19 billion in assistance from the federal government.

Texas follows with $7 billion, New Jersey with $6 billion, and New York with 5.3 billion, which is largely due to super storm Sandy.

The Bayou State is bracing itself for another hurricane season, which is only two weeks away. It has been a perennial target for natural catastrophes in the past few years, which include a whipping from hurricanes Katrina and Rita, tornadoes and constant flooding.

Local media outlet WAFB calculated that in the past 18 months, 56 of the state’s 64 parishes experienced major disasters, representing 90% of Louisiana. Of the 56, 14 parishes were declared under a state of major disaster twice.

Despite its lack of luck with the weather, residents in the state have obstinately refused to get coverage. WAFB reported that the number of insured residents widely varies in the different areas of the state, ranging from 5% up to more than 50% in coastal areas. In Baton Rouge, only 13% have coverage.

One year before Katrina, 378,000 had flood insurance. Post-Katrina, the number of policy holders went up to 494,000 but this figure has slipped to a little more than 490,000 currently. Still, it is the state with the third most number of flood insurance policies behind Florida with 1.8 million and Texas with 600,000.


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