Insurance companies operating in Louisiana will be billed at least $ 100 million to pay claims from two bankrupt real estate insurers that went bankrupt in the wake of Hurricane Ida
The Advocate reports that the board of directors of the Louisiana Insurance Guaranty Association – a state-sponsored safety net for policyholders – voted for the first time since 2004 to charge insurers 1% of their net written premiums to help to fill his coffers.
The guarantee fund, known as LIGA, covers claims from policyholders whose insurers become insolvent.
His work was triggered after the state’s insurance department took control in mid-November of two regional insurers whose finances collapsed as a result of Hurricane Ida: Access Home Insurance Co. and State National. Fire Insurance Co.
The two companies have covered approximately 28,000 homeowners.
Now, when these policyholders file a claim, they will deal with LIGA or one of its subcontractors. At least 8,000 complaints have already been filed to date.
“Our goal is to pay people as quickly and efficiently as possible, but we are in a period of transition,” said John Wells, executive director of LIGA. “We’re talking about days and weeks, not months and years, for people to get paid. “
At a minimum, the guarantee fund will need $ 100 million to close the gap between what is owed to policyholders and what insurers have on hand, Wells said. But LIGA could look to insurers again next year for an additional 1% assessment if it needs funding to cover more insolvencies after two years of devastating storms across Louisiana.
Hurricanes Laura, Delta and Zeta in 2020 cost insurers $ 10.6 billion. Hurricane Ida, which struck in August, is expected to cost insurers between $ 20 billion and $ 40 billion.
Access Home Insurance received claims totaling around $ 180 million after Ida and only had $ 115 million in reinsurance and cash on hand. Meanwhile, State National Fire Insurance has recorded more than $ 70 million in claims with $ 41 million on hand, Wells said.
The policyholders of the two firms will not lose their coverage and will be able to continue to file claims for any loss that may arise. They can even choose to renew their policy. Officials hope to deliver the policies in bundle to a new carrier.
Insurance commissioner Jim Donelon said five or six companies have already reached out to express interest in underwriting the policies.