A homeowner has filed a lawsuit claiming that Louisiana Citizens Property Insurance Corp. is insolvent and should be barred from raising its rates.
Calvin Gordon Sr., of New Orleans, said that because Citizens, the state’s insurer of last resort in storm-threatened areas, faced net losses of $828.6 million from the 2005 hurricanes, the company should be considered insolvent under state insurance law.
Those losses were ultimately paid by assessments levied on insurance companies and passed on to property owners around the state through their insurance companies.
But the suit contends that asking Citizens policyholders to pay special assessments at a time when many are still waiting for supplemental claims payments is an unfair burden that would be made worse if Citizens also raised its rates.
State District Judge Piper Griffin set a hearing for Dec. 20 after the suit was filed Dec. 12.
A proposed Citizens rate increase is on the agenda of the Louisiana Insurance Rating Commission on Dec. 15. Citizens wants to raise rates by a statewide average of 31.7 percent on homeowners policies, by 68.2 percent on wind-only policies and by 138.4 percent on business policies.
Because these rates are all statewide averages, the actual amounts in hurricane-prone south Louisiana are likely to be higher.
Amy Whittington, a spokeswoman for the Louisiana Department of Insurance, said the commission meeting will not be affected by the lawsuit.
Gordon’s lawsuit says it cost him $86,787 to repair his home after Hurricane Katrina, but Citizens paid only $19,072. If other Citizens policyholders also believe their payouts were inadequate, Citizens losses could be greater than $828.6 million, according to the suit.
Information from: The Times-Picayune, www.timespicayune.com.
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