Citizens customers receiving application fee refund

Nearly 234,000 policyholders of Louisiana Citizens Property Insurance Corp. are being issued refunds for application fees charged to them without their knowledge.

Louisiana Insurance Commissioner Jim Donelon ordered a refund in December, saying the declaration page of the Citizens policy did not disclose or specify the fee.

The $40 checks have been issued to 233,869 policyholders and are accompanied by a letter from Rust Consulting Inc., which is handling distribution of the funds.

“Citizens Property Insurance policyholders recently started receiving letters and checks in the mail for this application refund and many are calling us and Citizens to verify that the refund is legitimate,” Donelon said Monday. “I want to assure policyholders that they are in fact legitimate and are being issued due to a court order.”

Citizens — which is the state’s insurer of last resort by providing coverage when traditional insurers won’t — had appealed Donelon’s ruling in 19th Judicial District Court.

The application fees are being refunded by Citizens, along with a payment for attorney fees set by the state court.

“These automatic refunds are not to be confused with the Citizens assessment rebate which all property policyholders — whether they are with Citizens or another insurer — are eligible for either as a tax credit or as a direct rebate through the Louisiana Department of Revenue.”

Citizens Chief Financial Officer Steven Cottrell had said previously the issue over the application fee apparently dates back to 2005 or earlier.

The fee was listed on the application page that policyholders filled out when buying coverage. For some unknown reason, the application fee wasn’t listed on the declaration page; it’s possible that Citizens management at that time wasn’t familiar with the requirement.

Cottrell had said Citizens tries to follow the law and corrected the problem when it was discovered.

Donelon’s ruling was the latest development in a class-action lawsuit originally filed in 2008.

The lawsuit, the lead plaintiff of which is Tracy Thibodeaux, of Houma, was certified as a class action, then decertified and eventually kicked back to the Insurance Department for an administrative hearing.

The plaintiff attorneys, led by Jason L. Melancon, requested that ruling in December 2012. The plaintiff attorneys eventually asked 19th Judicial District Court Judge Timothy Kelley to force the Insurance Department to hold the hearing.

Donelon then ordered Citizens to refund all of the application fees it collected during the time the fee was not listed on policy declaration pages.