Insurance industry representatives said the residual market in the three Gulf states hit by Hurricane Katrina will have no problems meeting their insurance obligations over claims arising from Monday's storm.
During a telephone news conference held today by members of the Property Casualty Insurers Association of America (PCI), they said there is enough cash and reinsurance available to handle the expected claims, and the bonding mechanism in Louisiana would cover any deficit that program may have.
Greg Lacoft, PCI's regional manager for Louisiana, said the state's residual market, Louisiana Citizens Property Insurance Corporation, created two years ago, allows for bonds to be issued to cover any deficits to the plan. Carriers writing property insurance in the state, who are members of the plan, would be charged back over a long period of time to eventually cover the losses. The cost would eventually be passed onto policyholders.
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