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Volume 13, Issue 12
December 2013


Commissioner Jim Donelon
Theodore "Ted" Haik, Jr., Chair
Jeff Albright, Vice Chair

Ray Aleman, Jr.
Lee Ann Alexander
J.E. Brignac, Jr.
Paul Buffone
Stephen F. Campbell
Sheriff Greg Champagne
Representative Greg Cromer

Louis G. Fey, Jr.
Michael Guy
Chris Haik
Lance "Wes" Hataway
Ron Henderson
Senator Ronnie Johns
Scott Landry
LTC John A. LeBlanc
Robert Moorman
Senator Dan "Blade" Morrish
Frank Opelka
Representative Kirk Talbot
Earl Taylor


Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

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Commissioner Donelon Takes Action on Federal Flood Insurance Rate Increases

As noted in the November newsletter, Louisiana filed an amicus curiae, or “friend of the court,” brief in support of Mississippi’s lawsuit against the federal government to stop the oppressive flood insurance rate increases mandated by the 2012 Biggert-Waters Act in its reauthorization of the National Flood Insurance Program (NFIP). A Department of Insurance press release issued since provides additional insight:

The Mississippi Insurance Department filed its lawsuit in late September asking a federal judge to block rate increases until the Federal Emergency Management Agency (FEMA) – which administers the NFIP – complies with all of the requirements of the new law, including an affordability study to Congress that was due last April.

The Louisiana Department of Insurance’s brief notes that many Louisiana residents received FEMA grants and other benefits following hurricanes Katrina and Rita that were conditioned in part upon their continued participation in the NFIP. At the time NFIP rates were reasonable and were anticipated to remain so. Those that rebuilt complied with the Base Flood Elevations (BFEs) in effect at that time; however, in compliance with the Biggert-Waters Act, flood maps are being updated. As a result of the remapping, many homes and businesses are now several feet below the new BFEs. If flood insurance premiums become unaffordable as a result of Biggert-Waters, then grant recipients may be subject to action by FEMA or their lenders. Also, in some circumstances the new flood insurance rates will result in an unconstitutional taking of property.

Commissioner Donelon’s comments on the rate hikes include, “The Biggert-Waters Act could have a devastating impact throughout south Louisiana as a result of the draconian premium increases that will make some properties unaffordable and/or worthless. The changes to the federal flood program will disproportionately affect policyholders along Louisiana’s working coast. Placing the bulk of the flood insurance burden on these hardworking homeowners is not only financially burdensome but unjust.”

“This [new BFEs] results in properties being subject to drastic increases in flood insurance premiums even though they were built in compliance with the Base Flood Elevations in effect at the time. The rates for these grandfathered policyholders are being phased out and will disappear if the homeowner’s policy lapses or the property is sold. Many properties have already begun to lose value and will become challenging, if not impossible, to sell. We feel that the devaluation of homes due to these changes is a de facto taking of people’s property value without due process.”

News Briefs

Commissioner Donelon Reminds Property Insurance Policyholders of Deadline to Claim 2009 Citizens Rebate

Insurance Commissioner Jim Donelon held a press conference this month to remind home and business property insurance policyholders that December 31, 2013 is the last day that they will be able to claim a rebate for the 2009 Louisiana Citizens Property Insurance Corporation (Citizens) assessment. The assessment has been collected each year since 2006, appears as a separate entry on the property insurance policy declaration page, and is collected by each insurance company with the premium.

Approximately $59 million in rebates, or 53 percent, of the total 2009 assessment remains unclaimed. Property insurance policyholders can currently claim rebates for assessments in years 2009 through 2013. The assessment is calculated as a percentage of premium and has equaled about four percent in recent years.

The forms and additional information on how to claim the rebate are available on the Department of Insurance website at http://www.ldi.la.gov/HurricaneTaxDeduction.html or you may wish to go directly to the Louisiana Department of Revenue website at  http://revenue.louisiana.gov/sections/general/calac/default.aspx .

7th Round of Citizens Depopulation a Success

This year’s effort to move policies from the state’s property insurer of last resort – Louisiana Citizens Property Insurance Corporation (Citizens) – to the private voluntary market has met with resounding success.

A total of 14,268 of Citizens’ residential policies have been assumed by the three participating insurers, effective December 1. This reduces Citizens’ residential policy count to below 90,000 and approximately 93,000 in total, including commercial. That makes this round of depopulation the most successful since 26,595 were taken in the first round on June 1, 2008. A more significant milestone is that the Depopulation Program has now succeeded in reducing Citizens’ policy count from its all-time high of 174,000 in 2008 – 9.8 percent of the market and third largest homeowner insurer – to a 2.7 percent market share and ninth in the state’s homeowners market.

The 14,268 policyholders now have until January 31, 2014 (60 days) to decide whether to opt out of the assumption and remain with Citizens. Based on prior depopulation round experience, typically less than two percent of the assumed policyholders elect to remain with Citizens.

Highs and Lows of Holiday Auto Theft

The National Insurance Crime Bureau released its “Annual Holiday Vehicle Theft Report” this month based on National Crime Information Center vehicle theft data for 2012. The analysis ranks 11 holidays by the number of vehicle thefts reported across the country on New Year’s Day, Valentine’s Day, President’s Day, Memorial Day, Independence Day, Labor Day, Halloween, Thanksgiving, Christmas Eve, Christmas Day, and New Year’s Eve.

For 2012, New Year’s Day had the most vehicle thefts on a holiday with 2,228 and Christmas Day had the fewest on a holiday (or any day) with 1,432. An average of 2,066 vehicles were stolen per day in 2012.

The NICB also reminds drivers to take extra care during the holiday shopping season to avoid vehicle theft and burglary by parking in well-lit areas, keeping packages in the trunk or otherwise obscured from view, and locking your vehicle before you leave it.

‘Twas the Night before Christmas, But Santa’s Having Trouble Getting Insured

With as much as we all love Santa Claus – particularly, good girls and boys – what would it take to fully insure the jolly old elf and his annual magical deliveries? A recent article in PropertyCasualty360 tried to figure just that and found that Santa is a difficult risk. The article is a fun read. Here is a meager summary of some of its twinkle-eyed insights:

Personal Insurance

  • House and Workshop- no local fire department, difficulty establishing accurate value. Property insurance, if available at all, would have to be through the high-risk market.
  • Life- advanced age and weight would make it difficult to obtain life insurance.

Business Insurance

  • General Liability- a children’s toy manufacturer with global distribution. The risk of product failure or injury across multiple jurisdictions makes it hard to insure.
  • Errors and Omissions or Professional Liability- since Santa claims to know if you’ve been bad or good and when you are sleeping, he is subject to the risk of lawsuit if he were to deliver a gift for the good to the bad or make the delivery while you were awake. Plus, Santa incurred legal expense when he was accused of identity theft while working for a department store on 34th Street. This is going to be expensive coverage.
  • Commercial Auto- Santa drives a custom vehicle mainly for delivery purposes once a year over many miles under icy conditions. Also, he has some reported prior losses: a grandmother got run over by a reindeer and a Grinch attempted theft. This insurance will be hard to place.
  • Workers’ Compensation- Santa has a vertically challenged workforce that uses older manual tools conducive to repetitive motion and other injuries. There may be OSHA or ADA compliance issues. This, too, will be a difficult policy to place.

Source: PropertyCasualty360, “Santa Claus: A Ho-Ho-High Insurance Risk,” Zollner, 12/6/2013

Have a Merry Christmas and a Happy New Year!
from the Members and Staff of the
Louisiana Property and Casualty Insurance Commission

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