FILE - Jim Donelon

Louisiana Insurance Commissioner Jim Donelon

(The Center Square) – Louisiana Insurance Commissioner Jim Donelon revealed SafePoint insurance company will acquire 30,000 homeowners’ policies after two insolvent carriers were taken over by state insurance officials in November.

SafePoint’s identity was kept hidden until the 19th Judicial District Court in Baton Rouge approved the plan. The Florida-based insurer has been licensed in Louisiana since 2015 and was one of three insurers that submitted bids to assume the policies.

“Policyholders can start the new year knowing that their homes are protected by a viable insurance company,” Donelon said in a statement. “I’m glad that we were able to find a proper landing spot for everyone in the private market and end this source of worry for policyholders.”

Donelon had filed injunctions against State National Fire Insurance Company of Baton Rouge and Access Home Insurance Company of New Orleans over unpaid policyholder claims stemming from Hurricane Ida, a category 4 storm that made landfall Aug. 29.

The troubled companies were placed into receivership, where court-appointed officials attempted to “rehabilitate” them rather than liquidate their assets.

Donelon endorsed SafePoint’s takeover proposal due in part to the insurer’s commitment to purchase the 30,000 policies for the price of the unearned premiums, or the period remaining on each existing policy.

Under the agreement, SafePoint retroactively will cover all homeowners’ claims from Access Home and State National Fire policyholders beginning Dec. 1. SafePoint will be able to rewrite policy rates and coverage terms as the policies come up for renewal after March 2022, the department said.

The Louisiana Insurance Guaranty Association (LIGA) is responsible for unpaid claims from Hurricane Ida and other events occurring before Dec. 1. LIGA covers up to $500,000 per claim, its website said.

LIGA is a nonprofit safety net entity that can access up to 1% of all state-member insurance companies’ annual funds to pay for a failing member’s financial obligations. Member insurers also receive state tax credits that are applied over a 10-year period.

While Donelon embraced the court-approved solution, many former Access Home and State National Fire policyholders will grapple with uncertainty in the coming months.

Louisiana has a homeowners’ insurance consumer protection law that will make it difficult for SafePoint to deny coverage or substantially change existing premium rates and coverage terms – providing Access Home and State National Fire policyholders were customers for more than three years.

SafePoint will have the option not to renew policyholders who had been Access Home or State National Fire customers for less than three years.

“Those customers may need to find new coverage at their renewal time,” the insurance department said.

If they cannot find homeowners’ coverage because of being high-risk or for any other reason, they will be forced to seek coverage from Louisiana Citizens Property Insurance Corp., the state-backed insurer of last resort.

Louisiana Citizens must offer insurance at higher premium rates than private insurance companies to avoid a state-sponsored entity from competing with private businesses, the entity’s website explains.

“Louisiana Citizens Property Insurance Corporation is required to ensure its rates are at least 10% above voluntary market rates,” a statement reads.

Before acquiring the 30,000 policies, SafePoint had $959,035 in direct written homeowners’ insurance premiums and 0.05% of the residential homeowners’ insurance market, the insurance department said.

Access Home and State National Fire had a combined $20.6 million in direct written premiums and 1% of the homeowners’ insurance market in Louisiana.

Staff Reporter

William Patrick is a regional reporter for The Center Square currently covering Louisiana. He previously covered the Florida Legislature and has a background in investigative journalism. William’s work has been widely published over his 10-year career.