Louisiana Private Insurer to Acquire Policies from Insolvent Insurance Companies

An unnamed Louisiana private insurer will assume to acquire all policies from two insolvent homeowners insurance companies that were placed into receivership in November by the Louisiana Department of Insurance.

Louisiana Insurance Commissioner Jim Donelon approved the transaction Wednesday, Dec. 15, which allows the insurer to acquire an estimated 30,000 policies from Access Home and State National Fire. Customers will not need to turn to the Louisiana Citizens Property Insurance Corp., the state-sponsored insurer of last resort, to find coverage.

The new insurer is acquiring the business, which represents one percent of the Louisiana homeowners insurance market, for the remaining unearned premium on each policy, according to the state.

The deal must be approved by the 19th Judicial District Court. LDI said it is unable to disclose the identity of the acquiring insurer until after all terms and the court approves.

The targeted effective date of the transaction will be Dec. 1, 2021, and the new insurer will cover any insurance claims made on or after that date. The Louisiana Insurance Guaranty Association (LIGA) is responsible for claims from Hurricane Ida and any other events prior to Dec. 1.

“The assumption of the policies is great news,” Commissioner Donelon said. “Most policyholders will not need to worry about finding new coverage. Their policies will automatically transfer to the new insurer on the same rates and terms as Access Home and State National Fire offered.”

Donelon said seven private insurers expressed interest in the policies and three companies formally submitted bids to the receiver.

According to the LDI, as policies come up for renewal each month beginning on Dec. 1, they will be rewritten using the new insurer’s rates and policy forms.

“Customers who had been with Access Home or State National Fire for more than three years will retain their protection under Louisiana’s three-year consumer protection statute, which makes it difficult for companies to non-renew or change rates or coverage,” an LDI statement said. “These transfers will occur even if the customer’s home was damaged in Hurricane Ida and has not yet been repaired.”

Policyholders who had been with Access Home or State National Fire will not receive the same protection and may need to find new coverage.

On Nov. 30, the Louisiana Insurance Guaranty Association voted to assess insurers $100 million to cover the insolvency costs of Access Home and State National Fire. Together, the two companies account for 1% of Louisiana’s property insurance market.

Topics Mergers Carriers Louisiana

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