Amount of Louisiana Citizens Insurance Rebate Being Cut

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As part of a package of tax credit reductions passed by the Legislature, Louisiana’s property insurance policyholders will lose 28 percent of a tax credit they can get for covering the debt of the state’s property insurer of last resort.

The reduction is retroactive, meaning those who failed to file for the tax credit over the last four years are also out 28 percent of the rebate. As a result, Insurance Commissioner Jim Donelon says the state can immediately grab about $60 million of the unclaimed rebates.

The average homeowner’s rebate from the annual assessment tied to Louisiana Citizens Property Insurance Corp. will be trimmed by a little more than $21, based on Louisiana Department of Insurance figures for 2014. The average homeowner paid about $76 last year to cover the assessment.

Insureds pay the Citizens assessment regardless of whether they are customers of Citizens.

The fee came about because state-backed Citizens – which insures property that private insurers won’t – had to borrow nearly $1 billion to pay Hurricane Katrina damage claims. Property insurance policyholders are assessed the fee to help cover those costs.

The state Legislature, flush with federal hurricane recovery funds at the time, passed a law that rebated the full amount of the fee to taxpayers starting in 2006.

Only a little more than half of Louisiana’s property insurance policyholders bother to claim the tax credit when they file their annual state tax returns. Despite a provision that still gives them four years to claim the rebates, half of the assessment goes unclaimed and eventually into the state’s general fund.

From 2006 to 2009, the assessment generated $478 million, but property owners left more than $269 million on the table that went back to the state.