The head of Louisiana's last-resort insurer says the claims generated by Hurricane Isaac will determine if it has enough funds to fulfill all of its obligations.
Isaac is on track for a New Orleans landfall within 25 hours, but claims from the storm are not the only worry for Louisiana Citizens Property Corp.
The state-run insurer is locked into paying a nearly $105 million judgment from a long-fought battle in a class-action case involving more than 18,500 policyholders who say Citizens did not begin adjusting their claims within a 30-day time limit after hurricanes Katrina and Rita in 2005.
Citizens has also authorized its lawyers to negotiate settlements with what could be thousands of policyholders looking to join this class and another class-action alleging the insurer didn't promptly pay undisputed losses after the hurricanes.
"We have sufficient cash to cover the losses [from Isaac] and operate—and hopefully pay off any settlement on the two class actions," says Richard Robertson, Citizens chief executive officer, in an email to PC360. "But that really depends on how much we end up paying on this storm."
Robertson does not estimate the potential impact of Isaac. Citizens' offices are closed until Friday, he says, adding that he may soon be evacuated from his home.
State Insurance Commissioner Jim Donelon has said the court judgments could be a "potentially devastating event" for policyholders, especially if a storm hit, because Citizens can assess residential and commercial policyholders to close a shortfall.
As of late last year Donelon said Citizens had about $200 million on hand but much of it is earmarked for expenses such as employee payroll, service providers and reinsurance.
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