In a bid to prevent an onslaught of additional policyholders having to sign up to the state’s insurer of last resort, Louisiana’s insurance commissioner has announced incentives for insurers that pick up a failed firm’s policies.
Insurance companies that take on policies from United Property & Casualty (UPC) before they are cancelled by the Florida judicial system on March 29 will receive credit towards the state’s Insurance Louisiana Incentive Program’s grant requirements, according to a Monday press release.
“Insurance companies that applied or plan to apply for the Incentive Program will receive credit for UPC policies taken prior to approval of their application,” the LDI said.
"This action is aimed at helping UPC policyholders save money by avoiding Citizens and achieving our overall goal of reducing Citizens’ book of business," said Louisiana Insurance Commissioner Donelon.
"Reducing Citizens’ policy count stabilizes rates for its current policyholders and reduces the likelihood that every policyholder in the state will be assessed in the event of a future Katrina or Ida-level catastrophe."
Last year, Louisiana’s insurer of last resort, Citizens, was forced to update its IT systems in a bid to cope with tens of thousands of new policyholders coming on board amid a spate of carrier exits.
As of August, around 60,000 policyholders were using the state’s last resort insurer, with a broker association CEO having cautioned that this could be set to double within months. Louisiana’s Citizens has higher-than-market rates by law.
UPC, which had previously sought to run-off its business in Texas, New York, Florida, and Louisiana, was placed into liquidation after its Hurricane Ian losses increased to $1.5 billion.
The insurer had planned to non-renew more than 200,000 policies across 12 states, with 30,000 of these in Louisiana, according to a Friday LDI bulletin.
Unless the policies are picked up, they face cancellation. In Florida, Slide swept in to pick up more than 91,400 policies from the insolvent insurer in February.
At a special session held in February, Louisiana lawmakers targeted the state’s ailing homeowners’ insurance market, resulting in two Bills being signed into law. HB1 established a $45 million program to encourage insurers to write new business in Louisiana.
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