Homeowners insurance group responds to threats of hurricane season
With the peak of the 2013 hurricane season fast approaching in the U.S., Louisiana’s Citizens Property Insurance is looking to protect itself from the financial impact of possible storms. The state-run organization accounts for the majority of the homeowners insurance policies currently in effect throughout the state and primarily provides coverage to properties in coastal areas. Louisiana, like Florida, often falls victim to tropical storms and hurricanes during the hurricane season, but unlike Florida, the state has not managed to avoid any significant hurricane disasters over the past five years.
Recent storms put pressure on Louisiana Citizens Property Insurance
Recent disasters have put financial strain on Louisiana’s Citizens Property Insurance and in an effort to prepare itself for the potential onslaught of future disasters, the organization’s governing body has agreed to boost the insurer’s line of credit with Regions Bank. The governing board is keen to increase the line of credit from $75 million to $125 million. The increase would help cover the costs associated with any major hurricane disaster and ensure that homeowners insurance claims are handled in a relatively efficient nature if such disasters visit the state in the future.
Initiative meant to offset hurricane season risks
The move is supported by the state’s Insurance Commissioner, Jim Donelon, who suggests that the increase will help alleviate concerns regarding home insurance and the organization’s ability to withstand natural disasters. Donelon also notes that the increase in bank credit only represents a short-term loan. The move is meant to offset the risks associated with hurricane season. Once the season passes, the organization’s line of credit is expected to return to normal.
Homeowners insurance sector remains exposed to hurricanes and floods
Hurricane season presents major risks for the homeowners insurance sector. While many insurers offer coverage for the damages that are caused by hurricanes in some parts of the state, these insurers are unwilling to account for the damages caused by floods. Floods are often triggered by hurricanes and are a matter handled almost exclusively by the federal government.