Insurance Transparency Project

Insureds,

I’ll keep it short today, but I wanted to pull a couple paragraphs from a Mowbray/Times-Pic piece about the Louisiana Insurance Rating Commission, which last week tabled requested rate increases of up to 138% by the state-owned insurer, Louisiana Citizens, and rejected outright a request by Allstate for a 5% “hurricane deductible” statewide.

For one thing, the story shows the panel isn’t just angry but is also aware that this is beyond the ability of a single rating panel to solve.

Here’s the story’s sub-headline:

“Legislature needs to fix problem at the root, rate commission says.”

ITP obviously agrees.(1)

Read the whole story for an interesting account of officials wrestling with a devil-and-deep-blue-sea dilemma . If Citizen’s does raise rates, it adds to already-burdened homeowners and businesses, retarding the recovery, such as it is.(See Bob Herbert’s NYT column today under the headline “America’s Open Wound” for a look at how that’s going.) If doesn’t raise them, it won’t have enough to cover a big disaster, leaving the whole state exposed, and, to boot, will hamper the development of the private market.

This quote from a New Orleans commissioner says it all:

“If you don’t get the rate, the system won’t work. That doesn’t seem fair. But if I don’t do it, we’ve got a real problem,” said New Orleans member Jabari Ragas. “We’re getting a Band-Aid for a stab wound.”

And it will get worse. Citizens is already the third-largest homeowners’ insurer in Louisiana, and it’s about to get much larger after an emergency ban on insurers’ dropping some coverage expires March 1. Citizen’s Secretary (chief) Terry Lisotta here tries to assuage worries, but not very successfully:

“Asked how much Citizens was expected to grow, Lisotta said that it’s anyone’s guess: estimates range from 60,000 policies to 200,000. But Citizens has hired new staff, switched to taking applications electronically and is making other operational changes so that it can handle 10,000 new policies a month, Lisotta said, and the group is ready to handle the stream of new policies.

‘We’re trying to update the system. We’re moving the process along,’ Lisotta said.”

And for those who think that all ITP does all day is think of ways to hammer ALL, Allstate’s regional counsel makes a pretty fair point in this exchange with Ragas.

“Commission members said it seemed unfair that the entire state should get slapped with a fairly hefty mandatory deductible, and asked whether it was possible to come up with a tiered approach. ‘I have an issue with the 5 percent statewide deductible,’ Ragas said.

Lorrie Brouse, regional counsel for Allstate, said her company also would favor a more tailored approach, but a state law says that on existing policies, companies must make deductible changes across the board and treat all policyholders in the state equally.”

I’ll spare you my usual why-state-based-insurance question.

(1) ITP is talking about itself in the third person these days, sometimes offline. ITP may need h-e-l-p and must check his (its?! Mommy!) health policy.

Thanks to Louisiana Lawyer Supreme.
Also thanks for yesterday’s item to Mississippi Legal Lion.