Louisiana Citizens Property Insurance Corp. Rates to Rise July 1

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The governing board of Louisiana’s insurer of last resort has approved an average 6.5 percent annual rate increase for its 119,000 homeowners’ policies.

Higher rates for those homeowners covered by Louisiana Citizens Property Insurance Corp. go into effect July 1. Citizens chief executive Richard Robertson said that on average, a homeowner will pay an additional $127 per year, bringing the average policy to about $1,730 annually. Robertson said the increase would bring in about $15 million annually from Citizens’ 119,000 homeowner policies.

The board earlier asked for an average 9 percent increase, but that was sliced by state Insurance Commissioner Jim Donelon. The reduced increase was approved on March 18.

Donelon said he reduced the rate request mostly because he and actuaries in the state insurance department did not believe Citizens should be accumulating capital and reserves as a private insurance company does.

Louisiana Citizens is a last-ditch insurer of homes and businesses in coastal areas in harm’s way of tropical disasters where private insurers refuse to issue policies. Donelon said that if Citizens has an overwhelming number of claims from storms, private insurance companies can be assessed to provide money. Private insurers tag those assessments on their policies and policyholders can file for a state income tax credit for the amount.

Under the law, Citizens rates must be 10 percent higher than average private insurance rates.

The rate increase would not be uniform across Citizens’ territory. Robertson said the rate hike generally will amount to about 7 percent for parishes below the Intracoastal Waterway and 1.5 percent for parishes above the waterway. About 113,000 policyholders will see rate changes – either up or, in some cases down, he said. The remainder will see little, if any change.

“Typically the coastal parishes are higher,” Robertson said. “But each property has its own rating.”