State-run Insurer Could Cover Dropped Allstate Policies in La.

Louisiana Citizens Property Insurance Corp., Louisiana’s state-run insurance company, could provide wind damage coverage for about 30,000 homeowners along the coast if Allstate Insurance Co. drops that coverage, Citizens’ top official told lawmakers.

Terry Lisotta said Citizens could handle the influx of wind-and-hail policies as long as it came in gradually – not all at once.

“If it is phased in, there is no big deal,” he said.

Citizens is one of the few insurers willing to write new homeowners policies in the state and would therefore be among the most likely to absorb any large-scale policy cancellations.

Lisotta could not estimate the added costs of the premiums nor the administrative costs to handle the 30,000 policies.

His comments came near the end of a joint meeting of the House and Senate Insurance committees during which some lawmakers urged Gov. Kathleen Blanco to call a special session to deal with insurance issues, including the idea of tightening language in a state law which Allstate says allows it to cancel the 30,000 policies.

Citizens serves as the insurer for homeowners who could otherwise not get coverage. The company recently sold $978 billion in bonds to shore up its finances. As of June 30, the company had 121,000 dwelling policies in effect, down 15,000 from the first quarter of the year, Lisotta said.

Edward Collins, Allstate’s managing counsel, testified that Citizens may have more capacity to insure the homes than Allstate, which posted a $1 billion profit in the second quarter of the year and has about 20 percent of the Louisiana market, with 220,000 policies, the state’s second largest homeowners insurer.

Allstate has been trying to settle its dispute with Insurance Commissioner Jim Donelon, over whether state law allows the company to drop wind-and-hail damage coverage for the 30,000 policies in Ascension, Assumption, Cameron, Iberia, Jefferson, Lafayette, Lafourche, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Terrebonne and Vermilion parishes.

Collins told the panel that other avenues are bring explored with Donelon’s staff to keep the coverage in place, but he said dropping the coverage beginning Jan. 1 is still a possibility if no alternative is found.

“We want to manage our risk” by assuring that Allstate customers around the nation can get paid when they file claims, he said.

If the wind and hail policies are not renewed, the decision would affect customers with just homeowner’s coverage, Collins said. If a customer has Allstate auto insurance as well as homeowner’s, the wind and hail coverage would remain intact.

Allstate would not say how many customers in the 18 parishes have both policies.

Information from: The Times-Picayune, www.nola.com.