This post is based on a report on the Legislative Auditor’s web site. It’s from 2006, so some things have changed, but it is a good snapshot of how Louisiana Citizens compares with other wind pools in the the south: Texas, Mississippi, Alabama, Florida, South Carolina and North Carolina. The report was ordered likely to see how other states run their wind pools and what Louisiana could do to improve. The biggest difference the report found was that only Louisiana and Mississippi contracted out their administration. Citizens has since changed that and is now manages itself. I was trying to cut and paste this chart from the report, but I can’t do it so you’ll have to follow the link in order to see it. A few highlights:
It’s interesting that only North Carolina does not allow its insurers to recoup the money the get assessed directly or indirectly from its policyholders. The other five states all allow either indirect or direct (LA is direct).
As far as assessments go, each state pool has the ability to levy regular assessments and all but Texas and Alabama can also levy emergency assessments.
Only Florida has a catastrophe fund set up as a state-run reinsurance system. Lawmakers in Louisiana tried to set one up in 2006 but were defeated.
All of the states except Florida require the wind pool rates to be higher than the private market. In theory, this prevents competition between the wind pool and encourages people to get out of it. Of course, what we’re seeing in Louisiana is that Orleans, Jefferson and the other Top 5 parishes are all GROWING in number of policies, not less.
I think this report was intended to help the Legislature figure out how to improve the performance of Citizens in the wake of Katrina and the Terry Lisotta scandal. As far as the administration of Citizens goes, it seems to be doing well. As far as the viability of the entire setup, the study doesn’t get into that.