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- Commissioner Donelon Places Americas Insurance Co. Into Receivership

FOR IMMEDIATE RELEASE

January 20, 2022

 

Insurance Commissioner Jim Donelon placed financially troubled homeowners insurance company Americas Insurance Company into receivership last week in the 19th Judicial District Court. The move is an important step toward the Louisiana Insurance Guaranty Association (LIGA) taking over claim payments, ensuring that most policyholders with pending hurricane claims will get paid.

Since Hurricane Laura hit our state in 2020 and through Hurricane Ida in 2021, the Louisiana Department of Insurance (LDI) has fulfilled its most important role — protecting policyholders — by closely monitoring the solvency of property and casualty insurers operating in Louisiana.

The combination of hurricanes Laura, Delta and Zeta in 2020, which cost insurers $10.6 billion; Hurricane Ida, which is projected to cost insurers between $10 billion and $20 billion; and increasing labor and materials prices caused by the hurricanes as well as the recent spike in inflation, has put several insurers in danger of exhausting their reinsurance coverage and running out of money.

“My number one priority is protecting Louisiana policyholders, and my decision to place this company into receivership will help do that,” Commissioner Donelon said. “LIGA can pay up to $500,000 per claim, and they’re ready to handle what’s coming.”

As major companies like State Farm and Allstate retreated after the 2005 storms, LDI worked to keep insurance available and affordable by recruiting dozens of small, regional insurers to our state. More than 30 new insurers came to Louisiana, giving property owners more options in the private market.

Commissioner Donelon twice lobbied the Legislature to increase coverage limits at LIGA to ensure policyholders are adequately protected. In 2008, he lobbied the Legislature to increase coverage to $300,000 from $150,000 per claim, and he sponsored legislation to increase the amount LIGA could pay per claim to $500,000 from $300,000 in 2010. Both proposed increases were in compliance with National Association of Insurance Commissioners (NAIC) model laws in place at the time.

According to the National Conference of Insurance Guaranty Funds, only nine states have guaranty fund coverage of $500,000 per policyholder.

Americas has approximately 24,000 policies and 13,000 Ida-related claims, and as of December 31, 2020, the insurer covered 1.31% of the Louisiana homeowners insurance market. Americas has been licensed in Louisiana since 1991.

A court-appointed receiver is now in charge of operating the company. Americas is in rehabilitation, a form of receivership aimed at solving problems at the company. Policyholders will be contacted by the court-appointed receiver or their insurance agent about claims and whether in-force policies will be transferred to another insurer.

Until recently, Americas was domiciled in Washington, D.C., although essentially all its polices were written — and all its Ida-related claims originated — in Louisiana. The Commissioner of D.C.’s Department of Insurance, Securities and Banking worked closely with LDI and consented to the redomestication of Americas from D.C. back to Louisiana for the purpose of conducting this rehabilitation.

Policyholders with questions about their insurance coverage or the status of their policies should contact their insurer or insurance agent. Policyholders with questions about claims should contact LIGA at 225-277-7151 or www.laiga.org. Policyholders may also contact LDI at 800-259-5300 or www.ldi.la.gov for assistance.

A copy of the Order is available here.

A copy of the Verified Petition is available here.

About the Louisiana Department of Insurance: The Louisiana Department of Insurance works to improve competition in the state’s insurance market while assisting individuals and businesses with the information and resources they need to be informed consumers of insurance. As a regulator, the LDI enforces the laws that provide a fair and stable marketplace and makes certain that insurers comply with the laws in place to protect policyholders. You can contact the LDI by calling 1-800-259-5300 or visiting www.ldi.la.gov