When the Louisiana Insurance Guaranty Association (LIGA) board of directors met on Nov. 30, the board voted to assess Louisiana insurance companies for 2021 and 2022 and also approved LIGA’s budget for 2022 that includes $200 million in assessments.

LIGA has budgeted $209,250,500 in total revenue for 2022. LIGA’s expenditures are expected to be $266,088,000, $56,837,500 more than revenue in 2022, according to the budget.

The reason LIGA’s revenue and expenditures are increasing almost 14-fold is that LIGA will pick up the claims and associated expenses for two Louisiana domiciled insolvent homeowners carriers, Access Home Insurance Company and State National Fire Insurance Company, and will assess admitted carriers to cover the losses.

LIGA expected its expenditures to be nearly $7.37 million less than revenue in 2021, according to the budget approved last year by the board. For 2021, LIGA budgeted nearly $7.69 million in revenue and $15.1 million in expenditures with an expected reduction in assets of $7.37 million, but as the end of the year approaches, LIGA expects revenue to be $5.1 million and expenditures to be $15.9 million by the end of the year, a decrease of $10.8 million in assets, a decrease in the bottom line that is $3.4 million more than the amount budgeted for 2021.

LIGA expects assessments of member companies in 2022 to be its largest revenue source, and distribution from liquidators is expected to be LIGA’s second largest revenue source with Interest income coming in a distant third. LIGA expects by the end of 2021 to receive $2.5 million in distributions from liquidators, $2.5 million less than the budgeted $5.0 million in distribution from liquidators for 2021. LIGA budgeted $8.0 million in distributions from liquidators for 2022.

LIGA expects to receive almost $2.58 million in interest income through the end of 2021, almost $220,000 less than the budgeted amount of $2.8 million. LIGA has budgeted $1.40 million in interest income for 2022.

At the end of 2021, LIGA expects interest income to be offset by a $92,967 net gain in investments, more than the $26,275 net gain in investments budgeted for 2021. LIGA budgeted no gain or loss in investment value for 2022.

LIGA expects 2022 revenue to be $204.12 million more than the $5.13 million that it expects year end 2021 revenue to be. LIGA’s budgeted revenue for 2022 is approximately $209.3 million.

On the expenditure side of its budget, LIGA expects to pay out $266.09 million for losses and expenses, both allocated and unallocated, for 2022, which means LIGA will use approximately $56.8 million of its assets during the year.

The $266.09 million in total expenditures budgeted for 2022 compares to an expected $15.9 million in total expenditures by the end of 2021, or approximately $830,000 more than LIGA budgeted for 2021.

As one would expect for an organization created to pay claims, LIGA’s largest outlay is to cover the losses of insolvent admitted property/casualty insurance companies. LIGA estimates claims paid by the end of 2021 will be $6.58 million, nearly 31 percent off the $9.5 million budgeted for 2021. The association expects to pay $200.0 million in claims for 2022.

Second to claims on the allocated expenditure side of the income statement is return premiums paid, which are expected to come in at $4.88 million by the end of 2021, approximately 388 percent more than the $1.0 million that was budgeted for 2021. LIGA budgeted $50.0 million for return premiums paid in 2022.

The next highest expected expenditures for LIGA on the allocated expenditure side of the income statement in 2022 are outside claims expense and TPA examiner fees. LIGA expects to spend $5.0 million on each one in 2022.

For 2021, attorney fees was the third highest expenditure on the allocated expenditure side of the income statement. LIGA expects to end 2021 with $1.95 million in attorney fees, approximately 22 percent less than the $2.5 million that was budgeted for 2021. LIGA budgeted $2.5 million in attorney fees for 2022.

During 2021, LIGA collected $65,595.52 from the Second Injury Fund, $284,405 less than the budgeted $350,000 for 2021. LIGA expects to collect $150,000 from the Second Injury Fund in 2022.

LIGA expects total allocated expenditures for 2021 to be $800,751 more than the $12.99 million budgeted in 2021. The amount budgeted for 2022 is $262.93 million, $249.14 million more than the $13.79 million expected to be expended by the end of 2021. In LIGA’s budget, allocated expenditures include claims, unearned premium and loss adjustment expenses, such as examiner fees, outside claims expense, attorney fees and legal expenses.

By the end of 2021, LIGA’s anticipated claims payments will amount to 47.7 percent of total allocated expenditures, including claims. According to LIGA’s 2022 budget, claims payments will account for 76.0 percent of total allocated expenditures.

LIGA expects total unallocated expenditures for 2021 to be $32,639 more than the $2.07 million budgeted for 2021. LIGA has budgeted to spend $3.16 million on unallocated expenses in 2022.

The most expensive category of unallocated expenditures (basically overhead) is salaries, which LIGA expects to come in at approximately $1.20 million in 2021, compared to the $997,700 budgeted. LIGA has budgeted $1.46 million for salaries in 2022, a 21.6 percent increase over the expected actual amount in 2021.

The second most expensive category of unallocated expenditures is data processing; LIGA expects to end 2021 having spent $15,345 less than the $265,000 budgeted in 2021.

The next most expensive category of unallocated expenditures is employee benefits, on which LIGA expects to spend $141,380 by the end of 2021. LIGA budgeted $139,500 for employee benefits in 2021 and budgeted $190,000 in 2022, a 36.2 percent increase over 2021’s budgeted amount.

The board voted unanimously to approve LIGA’s budget for 2022.