Louisiana’s property insurer of last resort expects to shift about 10,000 policies to private insurance companies for 2016, a move that will reduce premiums by roughly $20 million.
Interim Chief Executive Officer Vijay Ramachandran told The Advocate seven private companies have requested policies from Louisiana Citizens Property Insurance Corp. Thursday.
So far, insurance agents have authorized the transfer of 9,458 policies, and that number will likely reach 10,000.
The state-backed insurer has been steadily reducing the number of policies it holds after 2005 hurricanes Katrina and Rita caused an influx of customers who couldn’t get coverage from private insurers.
State law lets agents decide whether to allow a private company to assume the Citizens policies, Ramachandran said. Policyholders have 60 days to decide whether to go with the private insurer selected or remain with Citizens.
Ramachandran spoke during a Citizens board meeting on Thursday.
In other action, the board voted to stop offering policies with a $10,000 deductible for damages that aren’t caused by hurricanes, or all other perils. Citizens will allow customers to renew the existing 6,300 policies with the $10,000 deductible, but no new policies will be written after Dec. 31.
The board also approved a 5 percent raise for Ramachandran as interim CEO. Ramachandran is also Citizens chief operating officer but took on the CEO duties following the March resignation of then-CEO David Thomas. Ramachandran’s salary will increase to around $288,000 in 2016. Thomas was paid close to $290,000.
Meanwhile, Chief Financial Officer Steve Cottrell said Citizens is the only of the state’s 10 largest insurers to offer the $10,000 deductible for everything but hurricane damage.
The result is that Citizens is offering lower rates than private insurers and adding business the state-backed insurer should not have, he said. The policies jumped from 5.2 percent of Citizens’ book of business at the end of 2013 to 7.7 percent at the end of September.
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