Louisiana Citizens Property Insurance Corp. will have to pay out a more than $100 million judgment to policyholders who protested that the state-run insurer did not begin adjusting their claims from hurricanes Katrina and Rita in 2005 within the state-mandated 30-day window, Louisiana Insurance Commissioner Jim Donelon said in an exclusive interview in this week’s FIRE Podcast.
While Citizens had won a temporary reprieve last week when a state appeals court ruled that Citizens’ $6 million appeals bond was sufficient to allow it to continue seeking judicial remedies — which, at this point, are limited solely to an appeal to the U.S. Supreme Court — Donelon said he has subsequently learned a state Supreme Court decision might render that an empty victory.
“I got a heads up from a usually reliable source that the state Supreme Court this afternoon (April 5) is going to reverse that appellate decision and that will remove our ability to forestall enforcement of the judgment while we pursue such an appeal,” Donelon said. “We would no doubt drop our appeal at that point, because the money would have been spread to the four winds by then.”
Despite the legal setback, the Louisiana wind pool can claim progress on several other fronts in recent months, including the placement of its first-ever catastrophe bond, the $125 million Pelican Re Ltd. On the podcast, Donelon discusses the decision to turn to the capital markets for reinsurance protection, as well as the success of Citizens’ ongoing efforts to transfer policies to the private sector.
Listen to the episode here, or subscribe to the FIRE Podcast in iTunes.
