Weeks after Lighthouse Property Insurance coverage announced it would stop writing new business in Florida, the insurer has been positioned into receivership in Louisiana.
Insurance coverage Commissioner Jim Donelon positioned Lighthouse into receivership final week within the nineteenth Judicial Circuit Courtroom. Lighthouse turns into the fourth insurer in Louisiana to exhaust their sources within the aftermath of Hurricanes Laura, Delta and Zeta in 2020 and Hurricane Ida in 2021. The mixture of hurricanes value insurers over $20 billion.
“For the primary three failed insurers, we have been capable of shortly discover an insurer to take over their insurance policies on the identical phrases and circumstances policyholders had beneath the failed corporations, and I’m hopeful we are going to do the identical for Lighthouse policyholders,” Donelon mentioned in a press launch.
A court-appointed receiver is now answerable for working the corporate, based on the Louisiana Division of Insurance coverage. Policyholders will probably be contacted by the court-appointed receiver or their insurance coverage agent about claims and whether or not in-force insurance policies will probably be transferred to a different insurer.
Lighthouse and its subsidiary Lighthouse Excalibur had roughly 30,000 insurance policies and 16,000 Ida-related claims, and as of Dec. 31, 2021, the insurer coated 3.27% of the Louisiana owners insurance coverage market.
The Louisiana Insurance coverage Warranty Affiliation can pay as much as $500,000 per pending declare.
Final month Demotech withdraw the financial stability rating for Lighthouse, which beforehand carried an “A, Distinctive” score based on the insurer’s web site.
“Regardless of a considerable capital contribution within the fourth quarter 2021, the working loss in 2021, which mirrored the analysis of losses and loss adjustment bills related to Hurricane Ida, resulted in a stage of capitalization under what was wanted to maintain FSRs on the A stage,” Demotech President Joe Petrelli mentioned in an announcement.
Lighthouse was based in 2008 and is domiciled in Louisiana. The corporate’s web site says its headquarters are in Tampa, Florida. Along with Louisiana, Lighthouse is permitted to jot down in Florida, North Carolina, South Carolina and Texas.
In late February, Lighthouse mentioned it could droop writing new enterprise in Florida however would honor any insurance policies quoted Feb. 15 or earlier than, with efficient dates on or earlier than Feb. 28.
The spike in insurer insolvency within the wake of the final two hurricane seasons has led Louisiana lawmakers to think about rising the minimal capital and surplus necessities wanted for all insurers licensed to jot down hearth and allied and/or owners’ insurance coverage traces of enterprise.
SB 264 sponsored by Sen. Joseph Bouie would increase the minimal capital and surplus requirement for present corporations from $3 million to $5 million by end-of-year 2026 and to $10 million by end-of-year 2031.
“What this invoice will do with these small regional carriers is it’ll require them to have extra ‘pores and skin within the sport,’” Donelon mentioned final month at a rollout of disaster reform laws. “Subsequently with $10 million on the desk as a substitute of $3 million, they’ll be making far more conservative purchases of reinsurance for his or her danger than they’re with much less belongings concerned in making that call.”
Crucial insurance coverage information,in your inbox each enterprise day.
Get the insurance coverage business’s trusted publication