Insurance Update

The Times Picayune has some detail from the meeting between Gov. Blanco and insurance companies including St. Paul Travelers, Zurich North America , Liberty Mutual Insurance Co. , State Farm , Allstate , American International Group Inc., Hanover Insurance Group and Pan-American Life.

Insurance Commissioner Jim Donelon asked St. Paul Travelers Cos. Inc. Tuesday to hand over the bulk of its commercial property insurance coverage in the state to Louisiana Citizens Property Insurance Corp. but to continue handling policies valued at more than $5 million rather than pulling out of South Louisiana commercial property markets completely.

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Citizens, the state-sponsored insurer of last resort, will be raising its commercial property coverage limits to $5 million per business building from $2 million per location, making the residual market a more useful option for commercial insurers, Donelon said. With higher limits, Citizens is better set up to take on more commercial policies, leaving companies like St. Paul Travelers with less-risky subsequent lines of coverage.

Travelers said it would consider Donelon’s request, but it was too soon to comment.

On levees

Company spokeswoman Jennifer Wislocki said the levee explanation was overblown. “Of course the levees are one part of the risk analysis of our market. It was truly that we had too high of a concentration of commercial exposure in those areas, and that’s why it was necessary to do this,” she said.

As for other companies the Times Picayune reported… “Most of the state’s largest commercial insurers are vague about their plans for next year” and provided the following info from various companies. (Click Read More)

State Farm, the state’s second largest commercial insurer with about 12.6 percent of the market, said that it was not at liberty to talk about future sales or marketing plans, because to do so would get into proprietary information.

State Farm’s Louisiana market area specialist, Morris Anderson, said the company is “closely watching” the amount of business that it writes, and that business has likely been written “with some restrictions.”

But as State Farm evaluates risk, Anderson said that his company is more interested in looking at “individual policies on an individual basis” rather than mass cancellations.

Zurich North America, the state’s third largest commercial insurer, noted that it has increased its commercial property underwriting in specialized areas such as builders risk insurance, but in other instances it may need to cut back.

“In those areas where we’ve had a change in the perception of risk, we do need to re-balance,” Jason Schupp, senior vice president and director of regulatory policy and programs, said after the meeting. “We don’t have an announcement in the pipeline such as what St. Paul Travelers did.”

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Other companies didn’t have much to say.

Allstate, the state’s fourth largest commercial insurer, which raised rates and deductibles to manage its risk on the homeowners side after unsuccessfully seeking this summer to cancel wind and hail coverage on 30,000 homeowner customers in South Louisiana, did not return phone calls seeking comment.

Liberty Mutual, the state’s fifth largest commercial insurer, said it was unable to comment.

A spokesman for Hanover Insurance, the state’s sixth largest commercial insurer, said he also wasn’t able to comment. In the company’s third quarter earnings statement last month, Hanover said that it had to increase its estimates of commercial losses from Hurricane Katrina and complained that the state interfered with its “ability to reduce exposure to areas affected by hurricanes Katrina and Rita.”

CNA , the state’s No. 7 commercial insurer, said that it will continue to do business in South Louisiana. “CNA does not currently have any plans to exit the market and we will continue to monitor our exposure and provide a market for commercial insurance business,” said CNA spokesman Charles Boesel.