BATON ROUGE — Insurance Commissioner Jim Donelon placed financially troubled homeowners insurance company Americas Insurance Company into receivership last week in the 19th Judicial District Court. The move is a step toward the Louisiana Insurance Guaranty Association taking over claim payments in the hopes that most policyholders with pending hurricane claims will get paid.
The Louisiana Department of Insurance said it has been protecting policyholders since Hurricane Laura hit the state in 2020 by closely monitoring the solvency of property and casualty insurers operating in Louisiana.
The LDI said the combination of recent hurricanes has put several insurers in danger of exhausting their reinsurance coverage and running out of money. The department said Laura, Delta and Zeta in 2020 cost insurers $10.6 billion. Hurricane Ida is projected to cost insurers between $10 billion and $20 billion. Increasing labor and materials prices and a recent spike in inflation are exacerbating the problem.
“My number one priority is protecting Louisiana policyholders, and my decision to place this company into receivership will help do that,” said Donelon in a press release. “LIGA can pay up to $500,000 per claim, and they’re ready to handle what’s coming.”
Donelon said that as major companies like State Farm and Allstate “retreated” after the 2005 storms, LDI worked to keep insurance available and affordable by recruiting dozens of small, regional insurers to the state. More than 30 new insurers came to Louisiana, giving property owners more options in the private market.
Donelon twice lobbied the Legislature to increase coverage limits at LIGA to ensure policyholders are adequately protected. In 2008, he lobbied the Legislature to increase coverage to $300,000 from $150,000 per claim, and he sponsored legislation to increase the amount LIGA could pay per claim to $500,000 from $300,000 in 2010. Both proposed increases were in compliance with National Association of Insurance Commissioners model laws in place at the time.
According to the National Conference of Insurance Guaranty Funds, only nine states have guaranty fund coverage of $500,000 per policyholder.
Americas has approximately 24,000 policies and 13,000 Ida-related claims, and as of Dec. 31, 2020, the insurer covered 1.31% of the Louisiana homeowners insurance market. Americas has been licensed in Louisiana since 1991.
A court-appointed receiver is now in charge of operating the company. Americas is in rehabilitation, a form of receivership aimed at solving problems at the company. Policyholders will be contacted by the court-appointed receiver or their insurance agent about claims and whether in-force policies will be transferred to another insurer.
Until recently, Americas was domiciled in Washington, D.C., although essentially all its polices were written — and all its Ida-related claims originated — in Louisiana. The Commissioner of D.C.’s Department of Insurance, Securities and Banking worked closely with LDI and consented to the redomestication of Americas from D.C. back to Louisiana for the purpose of conducting this rehabilitation.
Policyholders with questions about their insurance coverage or the status of their policies should contact their insurer or insurance agent. Policyholders with questions about claims should contact LIGA at 225-277-7151 or www.laiga.org. Policyholders may also contact LDI at 800-259-5300 or www.ldi.la.gov for assistance.
