Commissioner of Insurance Jim Donelon urged people who still have homeowners policies with Lighthouse Excalibur Insurance Company, Maison Insurance Company and Southern Fidelity Insurance Company to get in touch with their agent immediately to place their coverage with another carrier. Donelon made this plea during a press conference held June 16 at the Department of Insurance and broadcast via Zoom.
Donelon told his audience that the Lighthouse Excalibur receiver had obtained a reinsurance contract extension of a week so the company’s policies could remain in force until June 30.
Originally, three weeks of reinsurance was purchased as the policies were to expire June 22, three weeks into hurricane season, but an additional week of reinsurance was purchased so policyholders would have until the end of month to find coverage. Lighthouse Excalibur is domiciled in Baton Rouge and had about 30,000 policies in force in Louisiana when it was declared insolvent at the end of March and ordered liquidated.
At the press conference, Donelon explained Lighthouse’s predicament. The company had reinsurance to withstand $316 million in losses and estimated it would have $200 million in losses from the 16,000 claims reported from Hurricane Ida. In early March, the company reassessed its losses and projected $356 million in losses, and later in the month estimated losses of $367 million to $386 million. At that point, LDI moved to take control of Lighthouse on March 29, and losses were estimated at $449 million once the receiver took over.
Maison Insurance policyholders also have until June 30 to obtain coverage elsewhere. According to Donelon, Maison was not insolvent, but was not able to obtain reinsurance for this hurricane season, so the company’s 12,000 Louisiana policyholders must seek coverage elsewhere.
Southern Fidelity, a Florida domiciled carrier, was ordered liquidated June 15 when the Florida Department of Financial Services was appointed receiver by the Leon County Circuit Court.
Donelon said Southern Fidelity has approximately 42,000 policies in Louisiana, and those policies will cancel on July 15.
Taken together, the three companies are leaving nearly 90,000 policies to find coverage with another carrier.
Donelon told insureds of the three companies if they could not find coverage with another company, they could get a policy with Louisiana Citizens Property Insurance Corp. (LCPIC), but they would need an agent to access coverage.
He said that LCPIC is presenting 2,800 quotes a day and writing 762 policies a day. Donelon expects LCPIC to grow to 90,000 to 100,000 policies and then start to off load some.
He warned insureds they need to have a policy in place. If they don’t place coverage, their mortgage lender will have the right to force place coverage. “That is not to your advantage,” Donelon said.
Lighthouse insureds who have open claims will have those claims handled by the Louisiana Insurance Guaranty Association, according to Donelon. And LIGA will refund the unearned premium.
During the press conference, Donelon touched on the state of the homeowners market in Louisiana. He told viewers that an “important duty” of LDI is to monitor the state’s insurance industry’s financial health. Including Lighthouse Excalibur four property insurance companies failed after the 2020 and 2021 hurricane seasons, according to Donelon. The other three are Access Home Insurance Company, State National Fire Insurance Company and Americas Insurance Company.
He believes the companies would have been able to withstand the 2020 hurricane season when hurricanes Laura, Delta and Zeta made landfall in southwest Louisiana, but Ida one year later “broke their backs.”
With the state’s first insolvencies, Donelon said, LDI was able to “find a soft landing” when SafePoint Insurance took 55,000 policies.
Despite the hard market, Donelon contends things aren’t as bad as in 2005 when hurricanes Katrina and Rita hit Louisiana. “There are still markets out there,” he said.
Donelon said he realizes that agents, in many cases, are overwhelmed. Many are working to place insureds’ coverage with LCPIC before 8 a.m. and after 5 p.m. because LCPIC’s computer works faster early and late.
He explained that by statute the Lighthouse policies could not be canceled mid-term. He was referring to the three-year rule which mandates that an insurer stay on any homeowners policy which the company has had for three years, except in certain circumstances, such as nonpayment of premium.
The receiver for Lighthouse, Billy Bostick, clarified that once the policies cancel, he would generate an unearned premium report and forward that information to LIGA. Until then LIGA could not pay insureds their unearned premium.
Bostick said that the receiver is “recasting the data” in a form that LIGA can receive.
Getting unearned premium to insureds was not an issue with other liquidations, Bostick said, because the receiver had obtained an assumption agreement with SafePoint Insurance to keep the policies in force.
“We will get through this,” Donelon said in concluding the press conference.