Louisiana Citizens Property Insurance board approves 3.74 percent ...

Baton Rouge -- The board of the state-run property insurer voted Thursday to impose a 3.74 percent assessment on all commercial and personal policyholders in the state starting Jan. 1.

Louisiana Citizens Property Insurance Chief Financial Officer Steve Cottrell said the fee is less than the 2012 assessment of 3.9 percent. It has hovered around 4 percent for the past few years.

The fee is paid by all commercial and personal property policyholders -- not just those insured by Citizens -- as a way to help pay off the nearly $1 billion in bonds sold in 2006 after Hurricanes Katrina and Rita to help the company pay claims and remain solvent.

"It started out at 5 percent and has dropped every year since" 2006, Cottrell said.

The lowered assessment has come from bond refinancing at lower interest rates and paying off some of the debt, Cottrell said.

He said about $2.3 billion in premiums will be subject to the assessment starting Jan. 1. The cost of the bonds' debt service next year is expected to be about $85.5 million, Cottrell said.

The average Citizens policyholder pays premiums of about $2,000 a year; the average non-Citizens homeowner policy costs about $1,430 a year, based on the latest data available, said Department of Insurance spokeswoman Ileana Ledet.

Cottrell said that Citizens has an estimated $850 million in bonds outstanding. All bonds must mature by 2026.

Insurance Commissioner Jim Donelon and his staff last month verified the $85.5 million in debt service for the bonds and approved the assessment that the board ratified Thursday.

The assessment can be claimed as a credit on the state income tax. If not taken there, it can be claimed by filing proof of payment and appropriate forms available from the Department of Insurance or the Department of Revenue.

Ed Anderson can be reached at eanderson@timespicayune.com or 225.342.5810.

Source: http://www.nola.com/politics/index.ssf/2012/07/property_insurers_board_approv.html

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