Citizens weighing options to close budget gap
BATON ROUGE - Louisiana's state-run property insurer of last resort is considering ways to close its multimillion-dollar budget gap. Both options would lead to increased costs to homeowners covered by traditional insurance companies.
Steve Cottrell, chief financial officer for the Louisiana Citizens Property Insurance Corp., outlined the issue Tuesday.
Citizens is $56 million in the red after it covers claims for Hurricane Isaac and settles class-action lawsuits for improper handling of past claims. Cottrell says that shortfall tops $100 million when other general operating expenses are included.
To drum up cash, Citizens could charge an assessment on private insurance companies around the state for each property policy. The insurers pass that cost on to customers.
The company also could borrow money. Those costs also get passed onto insurance customers covered by private companies.