More than 41,000 property damage claims have poured into Louisiana Citizens Property Insurance Corp. since Hurricanes Gustav and Ike, but the company’s CEO said Sept. 18 it can handle the claims without raising fees on policyholders.
John Wortman said the state-run property insurer of last resort was expected to get about 55,000 damage claims from the back-to-back blows of Gustav and Ike. By comparison, in 2005, Citizens received 80,000 claims from hurricanes Katrina and Rita.
But while the claims from Katrina and Rita hobbled the company and forced massive borrowing, Wortman told his company’s governing board that the company has $350 million in cash on hand – more than enough to cover the expected $150 million cost of this year’s hurricanes.
“That’s great, great news,” said Jim Napper, executive counsel to Treasurer John Kennedy, who was representing Kennedy on the board.
About 2,000 of the storms’ claims have been closed so far, and Wortman said he expects thousands of the claims to fall under policyholders’ deductibles.
Citizens, Louisiana’s third-largest homeowners insurance company, borrowed $1 billion to cover claims after the storms of 2005 and is repaying that debt by passing on fees to private insurers, who in turn are charging their customers rate hikes to cover those fees over the 20-year repayment.
Gustav and Ike won’t force such borrowing, or such fees, Wortman said.
The quasi-public company overseen by the state carries more than 140,000 homeowner policies and has spent years digging out from financial and computer troubles that erupted in 2005 when the storms hit. State audits have found alleged fraud and mismanagement, plus misspending of company money. New management has been put in place.
Wortman said Citizens hasn’t grappled with the types of computer problems it faced after Katrina and Rita, and he said the adjuster shortages also haven’t reoccurred.
“It seems like this time Citizens has functioned like it should have,” Napper said.
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