St. Paul Travelers is scaling back plans to stop renewing most of its commercial policies in the New Orleans area this year, a decision that is “very good news” for businesses here after the 2005 hurricanes, Insurance Commissioner Jim Donelon said Jan. 4.
Travelers, Louisiana’s largest commercial insurer, initially told state officials a month ago that it would not be renewing 80 percent, or $2.4 billion, of its commercial coverage in greater New Orleans, Lake Charles and Lafayette when existing policies expire.
However, Donelon said the St. Paul, Minn.-based company has “reconsidered” and now plans to stop renewing 40 percent, $1.2 billion, of its commercial coverage in the three regions.
Travelers’ latest renewal rates are consistent with plans announced by other major insurers that are writing commercial policies here, according to Donelon.
“All companies are in that ballpark,” he told reporters after briefing City Council members on Travelers’ plans.
Travelers spokeswoman Jennifer Wislocki said the company never publicly disclosed its initial plans, but she called its decision to renew 60 percent of its commercial coverage in 2007 a “significant modification.”
“Our new plan will help New Orleans achieve economic stability and allow Travelers to reduce its exposure to catastrophic loss,” Wislocki said.
Although Travelers plans to write new commercial policies in 2007, the company will not be writing new policies for homeowners. Travelers only accounts for about 3.9 percent of the homeowner’s policies in Louisiana, however.
“It’s just a constant evaluation of the market,” Wislocki said. “At this point, any new business is on hold for homeowners.”
Wislocki said Travelers will renew 70 percent of its combined commercial and homeowners coverage in metropolitan New Orleans, 80 percent in coastal parishes outside New Orleans and 85 percent statewide.
Hurricane Katrina devastate much of southeastern Louisiana on Aug. 29, 2005; Hurricane Rita did the same to southwestern Louisiana almost a month later.
Travelers chairman and CEO Jay Fishman outlined the company’s plans in a letter to Donelon, Gov. Kathleen Blanco and New Orleans Mayor Ray Nagin. In the letter, dated Jan. 3, Fishman said the company’s new plan “will approach non-renewals with an eye toward whether other companies are offering similar coverage in the market to fill the gaps.”
“We remain committed to both Louisiana and New Orleans, and recognize the importance of insurance to their economic vitality,” he wrote.
Donelon said Travelers is responding to a chorus of protests from state and federal officials, including Blanco and Donald Powell, President Bush’s chief of Gulf Coast hurricane recovery.
“They heard it and they responded very positively,” Donelon said
It isn’t clear how many businesses are affected by the changes, which take effect when policies come up for renewal, but The St. Paul Travelers Companies Inc. wrote about 14.9 percent of the state’s commercial policies in 2006.
State Farm Insurance Group accounted for 12.6 percent of the state’s commercial policies last year, followed by Zurich Insurance Group at 10.3 percent and Allstate Insurance Group at 5.9 percent, according to the insurance department.
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