The Insurance Commissioner of Louisiana, James J. Donelon, published a Directive aimed toward all property & casualty insurers and producers operating in Louisiana that they have an obligation to advise policyholders eligible for the Louisiana Citizens Property Insurance Corporation (Citizens) policy take-out program of their eligibility prior to rejection of the offer.
Citizens is a FAIR plan and helps property owners who are unable to get insurance from the voluntary market. The commissioner opines that getting policyholders out of Citizens is vital to the state's economic recovery. Citizens developed a process to depopulate policies, and started that process, in 2008. Private insurance companies are encouraged to assume policies that are approved for depopulation.
In a prior round of the take-out program, around 21,000 policies were approved by Citizens for take-out but only 5,000 of those offers were authorized for removal by the producers for those policies. In the ongoing round of depopulation, over 19,000 policies have been identified as candidates for the take-out program, but the majority have not been accepted by producers.
The policyholders who are eligible for the take-out program would have a significantly more affordable premium. To increase policyholder awareness of this, and to further depopulate Citizens, the commissioner's office has sent a notice to all policyholders whose policy has been approved for the take-out program. Producers who hold a policy that has been approved for take-out are expected to advise the policyholder of the potential benefit from the program. The policyholder should have the right to make an informed decision, and have the final say on whether they want to opt for the take-out program plan, or stick with the Citizens plan.
The Directive can be found here.
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