La. Commissioner Sees Improving Insurance Market

Louisiana's insurance market is showing signs of improvement, with indications that the number of policyholders in its insurer of last resort is declining, but conditions are still difficult, the state's insurance regulator said.

Louisiana Department of Insurance Commissioner James J. Donelon, in an interview, said he told a realtor's group in New Orleans that his agency is working to attract more insurers to the state. "We are truly beginning to see the light at the end of the tunnel, and that is not an oncoming freight train."

Much of that success depends on the absence of a hurricane hitting the state again, and he said he is keeping his fingers crossed that the next few months will remain as quiet as the past two-and-a-half months have been.

"We are cautiously optimistic," he said.

Surplus lines have led the rebound in Louisiana, as has historically been the case, said Mr. Donelon.

He noted that State Farm is resuming writing limited business in the state, which he called significant because it is the largest writer of homeowners insurance there and the second largest writer of commercial business.

That State Farm business is going to existing customers and some new customers on the commercial side. But the writing remains limited, Mr. Donelon reported.

Despite the pullout of some standard lines carriers, he noted that some have remained in the "bowl" of the New Orleans area post-Hurricane Katrina, naming Republic Group of Dallas, Fireman's Fund, Chubb, AIG and surplus lines writers.

There is market available, but it remains "prohibitively expensive," he pointed out. The good news, he remarked, is that prices are stabilizing.

Another piece of welcome news, said Mr. Donelon, is there are indications that the state's insurer of last resort, Citizens Property Insurance Corporation, is seeing signs of decline in new and renewal applications based on a year-to-year comparison.

He said the trending has seen a downward cycle over the past few months and it is most significant in the commercial area. While not having exact numbers available, he said the decrease was around a thousand.

Mr. Donelon said this speaks to the return of the private sector insurers and the desire of commercial clients to be in that sector. He also noted the state freezes 85 percent of its homeowners market in the private sector to prevent Citizens from being overburdened.

"Our commitment is to depopulate [Citizens] through whatever means we can," said Mr. Donelon.

But, he said the state still faces challenges.

"We are not in good shape yet, because our availability is still tight and our affordability is at an all-time high," he pointed out. "We still have a ways to go on both fronts, but we're convinced the solutions to both of those problems is in the private sector, not the public sector."