Louisiana's new matching grant program for insurers willing to take on coastal homeowners as customers has attracted five carriers, an official said today.
Denise Brignac, deputy commissioner for the Louisiana Insurance Department's office of financial solvency, said the agency has completed a review and by January hopes to allocate $26 million to insurers that qualify.
She said the five firms that are in line for grants are:
o Imperial Fire and Casualty, Opelousas, La.
o Southern Fidelity Insurance Company, St. Petersburg, Fla.
o ASI Lloyd's, Dallas.
o Occidental Fire and Casualty, Raleigh, N.C.
o Companion Property and Casualty Insurance Company, Columba, S.C.
Ms. Brignac said that the department had completed an in-depth review of the companies' financial situation before approving the insurers.
Before they can receive any monies, she explained, the legislature's Joint Budget Committee must approve transfer of the monies for disbursement.
This month the committee is due to meet and "we hope to cut checks the first week in January," she said.
The grants come under the Insure Louisiana Incentive Program, which it is hoped will increase private market capacity by 15 percent, Insurance Commissioner Jim Donelon said in October.
Under the program a total of $100 million has been authorized to qualified property insurance companies from a $100 million state fund, which is to allocate 20 percent of the total amount of funds available for grants to domestic insurers.
Insurers that join the program must attract at least 50 percent of their net written premium from policyholders whose property is located in the 37 parishes included in the federal Gulf Opportunity Zone Act in Louisiana.
In addition to writing in the GO Zone, Ms. Brignac noted that insurers must write 25 percent of the net written premium for policyholders whose property is insured by the state's insurer of last resort–Louisiana Citizens Property Insurance Corp.
At least half of this 25 percent must be policyholders whose property is located in parishes included in the GO Zone.
Companies that apply for the program at a minimum need an A.M. Best Company "B-plus-plus" rating, capital and surplus of $25 million, and may not receive a grant amounting to more than 20 percent of their capital and surplus.
The state's money must be segregated on the insurer's financial statements, and each dollar of grant money must be matched with $2 in premium.
A $5 million grant would have to be matched with $5 million in surplus and two-to-one writings against that–or $20 million in premium.
Once insurers receive funds, they must write 50 percent of that amount in GO Zone parishes and 25 percent through Citizens.
Insurers must remain in the program five years to earn the full grant amount, and each year the insurance department will do a target exam to make sure the company has satisfied program requirements. If they have, 20 percent of the grant is released into company surplus.
Insurers that don't meet requirements can be deemed in default and must repay any unearned portion of the grant.
Program details are online at www.ldi.state.la.us.
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