Insurance commissioner approves Citizens home insurance rate hike of 63%
BATON ROUGE - More than 120,000 policy holders living south of I-10 and I-12 could face a massive insurance rate increase if they have Citizens homeowners insurance.
Insurance commissioner, Jim Donelon, signed off on a 63% increase for Citizens policy holders on Monday.
He says it's a painful, yet necessary decision in order to comply with state law, which say Citizens insurance must be the most expensive option.
“I have no choice in the matter, because Citizens is a quasi-state agency created by the legislature to provide a market of last resort for policy holders that can’t get coverage for whatever reason in the private sector," Donelon said.
That rate hike isn't supposed to take effect until January 1 for new policy holders. For those insured through Citizens already, the increase won't happen until renewing the policy.
“I feel the pain of my constituents and would urge them to continue shopping for alternatives to Citizens because this increase doesn’t go into effect until January 1. So if they can get coverage between now and January 1, that will never hit them," Donelon said.
With limited options at this time, Donelon is looking into a plan that will bring more insurance companies into the state. He says he did something similar after Hurricanes Katrina and Rita, depopulating Citizens by a drastic amount of policy holders.
Donelon says those companies see what Citizens is charging policy holders. He hopes that means they'll see a market with homeowners hurting for a more affordable option and bring their business here.
"We have been approached by several [companies] who have been reading about and seeing the flood of policies to Citizens and the prices that by law citizens has to charge. Companies know that they can get those policies off of Citizens and onto their books with the premium that comes with it in a quick and relatively short period of time."
By the end of hurricane season, Donelon hopes to see a more competitive home insurance market throughout the state.
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