Local insurance hikes will be steep

Local insurance hikes will be steepTHIBODAUX – Insurance-rate hikes for Louisiana Citizens policy holders will be much higher in most parts of Lafourche and Terrebonne parishes than the 7 percent statewide average.

Set to go into effect April 1, premium increases for policyholders with Louisiana’s insurer of last resort will be 22 percent for Terrebonne Parish residents north of the Gulf Intracoastal Waterway and 33 percent south of the Intracoastal Waterway.

In Lafourche, Citizens’ customers south of the Intracoastal will see a 32 percent increase. The only local area falling below the state average will be in Lafourche north of the Intracoastal. Policy holders there will see a 6 percent increase.

The 7 percent average increase statewide is the outcome of a settlement between the state Department of Insurance and Citizens, It falls below the hike proposed by Citizens in October.

Projected to produce $15.3 million of additional revenue for Citizens, a state-sponsored insurer, the 7 percent change is part of a plan to ensure its premiums stay above the offerings of private companies.

The intent is to move policyholders away from the state-sponsored program and to a private insurer, according to Insurance Commissioner Jim Donelon.

Citizens primarily provides homeowner coverage for people who can’t find it elsewhere.

The rate hike proposed in October, approved by a 4-3 vote of Citizen0’s board members, meant Lafourche and Terrebonne customers were looking at increases as high as 43 percent in some coastal regions.

But the estimate used to compute the increase wasn’t on par with actuarial standards and was tossed, Donelon said.

The department must choose the higher of two homeowner premium estimates, in accordance with a state’s law intent on encouraging private competitions. One is based on surveying companies about their rates, and the other is based on a formula evaluating risk.

Donelon said he took the market estimate, which was lower, after staff members noted the other estimate included unaudited data.

The April hikes, which will come when policies are renewed, could be just one of two increases this year.

April’s increase is a 2008 rate adjustment, necessary because John Wortman, chief executive of Citizens, wants to avoid risking a delay for the 2009 rate analysis.

Citizens will begin that rate analysis between April and June, so policies renewing in the fall could experience the 2008 and 2009 spike at the same time.