Louisiana Citizens Rate Increase Will Be Less Than Expected

A projected 10 percent increase in rates for clients of the Louisiana Citizens Property Insurance Corp. will “probably be less than that,” the chief executive officer of the state’s insurer of last resort has said.

John Wortman said the average statewide increase will likely come in between 5 percent and 7 percent, if Department of Insurance officials approve the rate structure.

The Citizens board sent two rate increases to Insurance Commissioner Jim Donelon more than month ago. One is for 9.8 percent with the filing of unaudited 2008 financial statements as well as audited ones for 2005, 2006 and 2007. The other is a 10 percent increase without the unaudited 2008 figures.

Other factors would also be included in the review of the rate increases by the department, including whether they are actuarially justified and fair.

Donelon’s staff has the rates under review now and should resolve any questions it has with Citizens’ proposed rate increases in time for the next Citizens board meeting Nov. 12.

But Wortman said that because Citizens’ reinsurers – the companies that insure the state-run insurer – have either agreed to reimburse Citizens for claims more than originally thought or are lowering their premiums to Citizens, the annual rate increase to policyholders will not be as high.

“There may be some reinsurance adjustments,” Wortman said. “We don’t have the final numbers.” The bottom line, he said, is that the rates will be in the 5 to 7 percent range.

Last year, the board approved a 14 percent rate increase, but after review by Donelon’s office the increase was pared to 7 percent.

Wortman said he would like the new rates to be in place for new policies and renewed polices as of March 1.

Donelon said he was unaware of the possibility of a lower rate increase. “I would wish for that on behalf of the struggling consumer” who needs a break on insurance costs in a time of economic problems, he said.

Information from: The Times-Picayune, www.nola.com