BATON ROUGE -- Insurance Commissioner Jim Donelon said Thursday he has reduced the proposed rate increase sought by Louisiana Citizens Property Insurance Corp., from a requested 9 percent to an average 6.5 percent boost. Donelon's actions must now be ratified or rejected by the Citizens board when it meets Friday at 9 a.m. in Baton Rouge. The board submitted the...
BATON ROUGE -- Insurance Commissioner Jim Donelon said Thursday he has reduced the proposed rate increase sought by Louisiana Citizens Property Insurance Corp., from a requested 9 percent to an average 6.5 percent boost.
Insurance Commissioner Jim DonelonDonelon's actions must now be ratified or rejected by the Citizens board when it meets Friday at 9 a.m. in Baton Rouge.
The board submitted the 9 percent rate increase request to Donelon in January. Donelon's staff reviewed the request and determined if it is justified. The board of the state-run insurer of last resort must then approve or reject Donelon's recommendations.
Citizens Chief Executive Officer Richard Robertson said he thinks the board will go along with the lower increase.
"It is what it is," Robertson said. "I thought the 9 percent was correct and proper, but I am not an actuary." He said even actuaries looking at the same data differ on a rate structure.
If the rates are approved Friday they will affect new and renewing policies as of July 1. Citizens insures about 115,000 property insurance policies in the state.
Donelon said his office shaved 0.2 percent from the 9 percent increase because mistakes made in a survey of rates in various areas that led the company to seek the increase. By law, Citizens rates must be 10 percent higher than the highest private insurance company rates in an area.
Donelon said he took off another 2.3 percent because it was excessive and served to build the company's capital and reserves.
"They don't need to be building reserves" with rates, Donelon said. He said other fees help Citizens remain solvent.
Donelon said he has been in discussions with Citizens officials about lowering the rates and also feels the lower rate increase will be acceptable to the board.
A 6.5 percent average rate would mean about a $127 hike, bringing the cost of the average homeowners policy to about $1,737 a year, up from teh persnet average of $1,606, said Steve Cottrell, Citizens' chief financial officer.
Policyholders in 40 parishes will see an increase in rates and those in 24 parishes will see a decrease, Cottrell said.
Ed Anderson can be reached at eanderson@timespicayune.com or 225.342.5810.