Those who hold insurance policies through Louisiana Citizens Property Insurance Corp. won’t see rate increases for at least two months because the agency can’t get a quorum on its board to approve the measure.
Premiums had been scheduled to start going up in October as policies renew throughout the year. Now, Louisiana Citizens Property Insurance Chief Executive John Wortman said they hope to begin the increase Dec. 1.
The Citizens board of directors has been unable to meet because its membership has been decimated by legislative requirements.
Last year, lawmakers sought to cut the insurance industry’s dominance over the state-backed company and changed the board’s composition to include representatives from the Louisiana Bankers Association, Louisiana Home Builders Association, Society of Louisiana Certified Public Accountants and the Louisiana District Attorneys Association. The groups, however, have been slow to provide the governor with prospective nominees.
This year, new financial disclosure requirements passed for people serving on public boards have made it difficult to solicit volunteers. Seven people resigned recently, mainly because of the financial reporting requirements, Wortman said.
Although the board is supposed to have 15 members, only seven seats are filled. Seven people are necessary for a quorum to hold a meeting.
In July, the first meeting after the proposed rate changes were announced, the group had to cancel its gathering for lack of a quorum. The group’s August meeting will be canceled for the same reason, Wortman said.
Citizens is hopeful new members will be appointed to the board this month so it can meet in September — even if someone has a conflict.
“That should enable us to get back in business,” Wortman said.
The company would raise rates by a statewide average of 18 percent, a reaction to increases imposed by private firms.
If approved by the Department of Insurance, the hikes will be most dramatic in southeast Louisiana, where Citizens policyholders will see double-digit increases in Jefferson, St. James, St. Charles and St. John the Baptist parishes. An exception is Orleans Parish, because rates were already high before Hurricane Katrina in 2005, so private insurers didn’t raise rates as dramatically after the storm, Wortman has said.
Wortman said that Citizens should be able to absorb the financial hit of delaying the implementation of the rate increases.
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