La. Commissioner Orders Horace Mann to Halt Cancellations, Nonrenewals

September 29, 2006

Louisiana Commissioner of Insurance Jim Donleon has directed Horace Mann Insurance Companies of Springfield, Ill., to immediately cease the wrongful cancellation of homeowners policies in 23 parishes and reinstate any policies that have been cancelled since the Illinois-based insurer implemented this unlawful plan of action in July.

The Louisiana Department of Insurance reported that Donelon ordered Horace Mann to stop any further action toward canceling or nonrenewing any homeowners policies in 23 designated Louisiana parishes on or near the coast and reinstate any homeowners policies that have been wrongly cancelled or nonrenewed under this improper course of action.

Donelon further directed Horace Mann to give him 30 days advance written notice of any future plans to cancel or nonrenew Louisiana homeowners policies, stating that he will vigorously defend in a court of law any continued violations.

At issue are Louisiana consumer protection provisions in R.S. 22:635.3 and 636.2 that protect policyholders from the cancellation or nonrenewal of a homeowners policy that has been in effect for three years or longer.

Horace Mann attempted to take this action based on what it alleged was a “material change in the risk” due to a number of storm-related factors including improperly maintained levees; coastal erosion; damage to barrier islands’ vacant lots; rising health risks; increased liability exposure caused by house evacuees; and the large volume of hurricane-related trash and debris.

Commissioner Donelon vehemently disagreed and advised Horace Mann that the “material change in the risk” must relate to the property being insured, not the surrounding levees, barrier islands and other factors listed.

Horace Mann also claimed that the Act of God prohibition set forth in R.S. 22:1471 did not apply. Commissioner Donelon advised the company that any claim due to Katrina and Rita must be considered an Act of God claim and therefore not subject to cancellation or nonrenewal.

Horace Mann Insurance Companies sell homeowners policies primarily to educators. It insures some 10,000 Louisiana homes with total written premium of around $10 million annually.

Parishes affected: Acadia, Ascension, Assumption, Calcasieu, Cameron, Iberia, Iberville, Jefferson, Jefferson Davis, Lafourche, Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne and Vermilion.

Policyholders who have questions about the continuation of their Horace Mann homeowners coverage in the above parishes should call their Horace Mann insurance representative for clarification.

For additional insurance-related questions, call the Department of Insurance, nationwide, toll-free number, 1-800-259-5300.

Source: Louisiana Department of Insurance

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