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 Court docket. 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 mix of hurricanes price insurers over $20 billion.
“For the primary three failed insurers, we have been in a position to rapidly discover an insurer to take over their insurance policies on the identical phrases and circumstances policyholders had underneath the failed corporations, and I’m hopeful we’ll do the identical for Lighthouse policyholders,” Donelon mentioned in a press launch.
A court-appointed receiver is now answerable for working the corporate, in response to the Louisiana Division of Insurance coverage. Policyholders will likely be contacted by the court-appointed receiver or their insurance coverage agent about claims and whether or not in-force insurance policies will likely 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 lined 3.27% of the Louisiana owners insurance coverage market.
The Louisiana Insurance coverage Warranty Affiliation pays as much as $500,000 per pending declare.
By mid-day Tuesday, Florida regulators had not posted any details about what steps they could tackle the corporate. The Florida Division of Monetary Companies had not filed a request for a consent order, which might make the division the receiver for an bancrupt Lighthouse, with the Leon County Circuit Court docket.
However trade insiders mentioned a liquidation was seemingly, given the latest developments.
Final month, Demotech withdraw the financial stability rating for Lighthouse, which beforehand carried an “A, Distinctive” ranking in response to 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 a press release.
A Lighthouse collapse would make it the seventh Florida-based property insurer to be deemed bancrupt within the final 31 months, and the third this yr.
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 allowed to jot down in Florida, North Carolina, South Carolina and Texas.
In late February, Lighthouse mentioned it will 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 consider growing the minimal capital and surplus necessities wanted for all insurers licensed to jot down fireplace and allied and/or owners’ insurance coverage strains of enterprise.
SB 264 sponsored by Sen. Joseph Bouie would elevate the minimal capital and surplus requirement for current 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 can require them to have extra ‘pores and skin within the recreation,’” 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 way more conservative purchases of reinsurance for his or her threat than they’re with much less property concerned in making that call.”
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