More than 65,000 homeowners in Orleans, Jefferson and other coastal parishes covered by the state’s insurer of last resort could see their rates jump 10 percent after Aug. 16.
Under state law, Louisiana Citizens Property Insurance Corp. must charge 10 percent more than private insurance companies. However, the state Legislature passed a separate law that exempted a dozen coastal parishes from the added charge. That law expires Aug. 15, unless it is extended.
The Citizens board voted Thursday to prepare the new rate filing for those parishes, a process that will take roughly two months.
“If you want my personal opinion as a board member, we should move forward,” said Sen. Dan “Blade” Morrish, R-Jennings.
The law was originally intended to help coastal areas recover after hurricanes Katrina and Rita, he said. But it’s been 10 years since the storms, the exemption is expiring and no bills have been filed in the Legislature to renew the exemption.
That means Citizens is legally obligated to add the 10 percent charge to policies, Morrish said.
Citizens Chief Financial Officer Steve Cottrell said if the Legislature extends the exemption, Citizens won’t implement the new rates. But Citizens has to prepare now to be ready by August.
The additional 10 percent will hit hardest in Orleans and Jefferson parishes, which account for more than half of Citizens’ homeowner’s policies. In Orleans, Citizens’ 19,294 homeowner’s customers would see their rates increase an average of $224 a year. Jefferson’s 16,319 policyholders would see rates rise by $208. St. Tammany’s 3,624 policyholders’ rates would increase by $157.
The other average increases by parish are Iberia, 2,860 policyholders, $114; Lafourche, 4,971 policyholders, $160; Plaquemines, 950 policyholders, $232; St. Bernard, 2,172 policyholders, $177; St. Mary, 2,134 policyholders, $122; Terrebonne, 6,699 policyholders, $162; Calcasieu, 2,890 policyholders, $104; Cameron, 465 policyholders, $213; and Vermilion, 2,804 policyholders, $116.
In other action, Citizens’ board approved refinancing the remaining $415.3 million owed on $678.2 million in bonds issued in 2006. Citizens borrowed close to $1 billion to pay insurance claims from Katrina.
At current interest rates, Citizens could save $115.2 million and pay off the bonds a year early, in 2022, Cottrell said.
The assessment property owners pay to cover the Katrina debt also would fall from the current level of 3.5 percent, or an average of $70 a year, to less than 3 percent, or about $60, Cottrell said.
While that isn’t much per person, the total comes to about $14 million a year, he said. And since the state refunds 70 percent of those fees to property owners, refinancing the bonds means the state will save about $10 million a year.