Louisiana Citizens Board Agrees to Retroactive 10% Rate Cut

The board governing Louisiana’s property insurer of last resort has agreed to drop rates by 10 percent across a dozen south Louisiana parishes retroactive to June 7, when the reduction was signed into law.

The $16 million annual rate cut is for customers of the Louisiana Citizens Property Insurance Corp., which provides coverage those who have trouble finding it in the private market. The reduction was required under a bill worked out in the last days of the legislative session.

Citizens customers won’t likely see a change on their bills until November, after the complex process for changing rates is complete. They’ll get rebates for any money they paid above what they should have.

The state-run property insurer is supposed to charge rates that are 10 percent higher than private insurers in an area. But lawmakers agreed to waive that requirement in Calcasieu, Cameron, Vermilion, Iberia, St. Tammany, Orleans, Jefferson, St. Bernard, Plaquemines, St. Mary, Terrebonne and Lafourche parishes.

Sen. Dan “Blade” Morrish, R-Jennings, sponsor of the rate cut bill, said it was a legislative response to large rate hikes enacted by Citizens on customers with wind and hail policies, hefty increases that outraged lawmakers from coastal parishes.

“It became obvious to me if we didn’t do something that there would be an all-out assault on Citizens in the next legislative session,” said Morrish, who sits on the Citizens board as chairman of the Senate Insurance Committee.

The Citizens board, in a 4-3 vote, refused to make the rate cut retroactive to the start of the year, however, even though Morrish suggested that would be the course that reflected the intent of lawmakers.

Insurance Commissioner Jim Donelon and a lawyer hired by Citizens to review the new law said it should only apply from when it was signed, not before that.

The rate continues until 2015. Citizens officials estimated it will save policyholders in the 12 parishes $16.4 million a year.