Louisiana homeowners who have paid an insurance premium over the previous 12 months are in line to receive payments from unused grant fund monies designed to entice private carriers to write property insurance in the state, officials said.
The grant program, called the Insure Louisiana Incentive Program, was created in 2007 by the state's legislature in response to insurance companies' reluctance to write policies after Hurricanes Katrina and Rita in 2005, according to Louisiana Department of Insurance (LDI) spokesperson Judy Wright.
A pool of $100 million was created which awarded matching grants of $2 million to $10 million to insurers who agreed to write new property insurance policies in Louisiana, she said.
Eligible companies had to write 25 percent of the net written premium on property insured by the state's insurer of last resort, the Louisiana Citizens Property Insurance Corporation, said Ms. Wright.
Additionally, 50 percent of the business taken from Citizens had to be within the 37 parishes included in the federal Gulf Opportunity Zone Act in Louisiana. The insurer would also have to keep the policies for five years.
The program consisted of three rounds of offerings, Ms. Wright noted. The first round, which ran from Oct. 2 to Nov. 1, 2007, saw five companies receive $29 million in grants. No companies qualified for the second round of offerings, and no proposals were submitted in the third round, which ended Dec. 31, 2008.
She said the downturn in the economy may have contributed to companies declining to participate in the program in the latest round.
Under the legislation that created the program, unspent funds exceeding $35 million are to be paid as a "Louisiana Property Insurance Premium Credit" to homeowners who have paid an insurance policy premium during the previous 12 calendar months, said Ms. Wright.
If the remaining amount had been less than $35 million, she said, the legislation states that the funds would have been allocated to help pay down the state's shortfall in its retirement systems.
Citing statements made recently by Insurance Commissioner Jim Donelon at the Baton Rouge Press Club, Ms. Wright said homeowners could receive between $50 and $100.
The program to distribute the funds will be administered by the LDI Office of Consumer Advocacy, and Ms. Wright said meetings have just begun to develop the payment program. She said there is no target kickoff date for payments as of yet.
Citizens has also held two rounds of a separate depopulation program to reduce the amount of policies in the insurer of last resort. The state's efforts have lowered the amount of policies in Citizens to around 130,000 from a high of 170,000 in early 2008. Pre-Katrina, Citizens had approximately 125,000 policies.
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