Louisiana Citizens Property Insurance Corp.’s board on Thursday is expected to approve increasing its commercial coverage rates by an average of 45.1 percent statewide.
Almost all of Citizens’ roughly 5,700 commercial property policies are in the New Orleans area and coastal parishes. Three-quarters of those policies are wind-and-hail only, the coverage for hurricane damage.
In September, Citizens’ board approved increasing the rates by 56.9 percent, but the state Department of Insurance reduced that to 45.1 percent. Citizens, the state-backed insurer for those who can’t get traditional insurance, said the increase was needed so the company could buy enough reinsurance, the insurance that insurers buy to cover the damage caused by a 1-in-100-year storm.
The commercial rate is one of several items on the board’s Thursday agenda.
Chief Executive Officer Richard Robertson said Monday there will be a general discussion of wind-only coverage, such as whether Citizens is required to offer the coverage and if legislative action is required for the insurer to drop it.
Robertson and some board members have recommended that Citizens get out of the wind-only business, which is growing rapidly.
Earlier this year, Citizens increased homeowners’ wind-only rates by an average of 58 percent statewide.
Robertson said Citizens will also give board members an update on settlements in class-action lawsuits — one for $20 million and the other for up to $40 million — related to claims adjustments and payments following hurricanes Katrina and Rita.
Robertson said an Orleans Parish District Court judge has given preliminary approval to a $20 million settlement in the Orill class-action lawsuit, a dispute over late payment of hurricane Katrina and Rita claims. Citizens will pay $1,000 per claim in that case.
Meanwhile, within the next week or so, a Jefferson Parish District Court judge is expected to hold a hearing on Citizens’ proposed settlement for the second phase of the Oubre class-action, Robertson said.
The lawsuit involves a dispute over the time it took Citizens to begin the claims process for Rita and Katrina.
Robertson said Citizens does not know how much the second phase of the case will cost.
Citizens will pay $4,500 per valid claim, but it’s unclear now how many of those claims there are, Robertson said.
In the first phase of the Oubre class-action, Citizens paid $105 million: $5,000 for each of the 18,573 policyholders and around $12 million in legal interest.
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