The 19th Judicial District Court in Baton Rouge has approved SafePoint Insurance Co.’s takeover of approximately 30,000 homeowners policies from two insolvent insurers, Access Home Insurance Co. and State National Fire Insurance Co., Insurance Commissioner Jim Donelon announced Dec. 29.
The assumption of policies, retroactive to Dec. 1, means that 30,000 Louisiana households will not need to search for new insurance coverage or end up in Louisiana Citizens Property Insurance Corp., the state-sponsored insurer of last resort, after Access Home and State National Fire were placed into receivership in November.
When the two companies were placed in receivership in November, Donelon said, “Historic back-to-back storm seasons coupled with the average cost of claims coming in higher than expected because of the pandemic got us where we are today.”
At the same time, the LDI explained that the combination of hurricanes Laura, Delta and Zeta in 2020, which cost insurers $10.6 billion; Hurricane Ida in 2021, which is projected to cost as much as $40 billion, and increasing labor and materials prices because of supply chain disruptions during the pandemic have put several insurers in danger of exhausting their reinsurance coverage and running out of money to pay claims.
No word on how many or which insurers.
State National Fire sought rate increases in 2021 for its voluntary homeowners program and for the take out policies it assumed from Louisiana Citizens, according to LDI’s records. Effective Sept. 24, State National Fire sought a 21.1 percent increase in its voluntary program and was granted a 25.5 percent increase. At the same time, the company sought a 41.6 percent increase in a separate voluntary program and was granted a 25.8 percent increase. Effective Oct. 7, State National Fire sought a 52.0 percent increase on its takeout business and was granted a 6.4 percent increase.
Access Home requested homeowners rate increases in 2021 of 20.0 percent and got 17.0 percent approved, effective Feb. 9; 4.2 percent and got 4.2 percent approved, effective Oct. 6, and 24.9 percent and got 24.9 percent approved, effective Oct. 28.
The name of the insurer acquiring the Access Home and State National Fire policies was confidential until Dec. 28 when court action made the plan official.
SafePoint acquired the policies for the price of the unearned premium.
SafePoint, based in Florida, has been licensed in Louisiana since 2015 and has an A rating from Demotech.
In its December news release, LDI stated that SafePoint is a tiny player in Louisiana with $959,035 in direct written homeowners premium and 0.05 percent of the residential homeowners insurance market. The homeowners insurer will grow dramatically with this transaction.
According to SafePoint’s summary of financial information on LDI’s website at Jan. 15, SafePoint has $119.6 million in assets; $79.3 million in liabilities and $40.4 million in surplus. The company wrote $9.7 million in Louisiana premium and $147.3 million in national premium. The company’s net income was $115,958.
Access Home and State National Fire had a combined $20.6 million in direct written premium and 1.0 percent of the homeowners insurance market in Louisiana. Access Home had 19,697 policies, or 0.86 percent of the homeowners market, and $17,684,440 in direct written premium and has been licensed in Louisiana since 2011. State National Fire had about 9,000 policies, or 0.14 percent of the homeowners market, and $2,945,198 in direct written premium, and has been licensed in Louisiana since 1981.
In announcing the policy transfer, Donelon said, “Policyholders can start the new year knowing that their homes are protected by a viable insurance company. I’m glad that we were able to find a proper landing spot for everyone in the private market and end this source of worry for policyholders.”
As Access Home and State National Fire policies come up for renewal each month starting in March, they will be rewritten using SafePoint’s rates and policy forms. Policies that renew before then will continue to show Access Home or State National Fire as their insurance provider because of proper notice requirements and will be rewritten as SafePoint policies upon renewal.
Customers who were with Access Home or State National Fire for more than three years will retain their status under Louisiana’s unique three-year consumer protection statute, which makes it difficult for companies to non-renew or change rates or coverage on an individual basis. These transfers will occur even if the customer’s home was damaged in Hurricane Ida and has not yet been repaired.
SafePoint will have the option not to renew policyholders who had been with Access Home or State National Fire for less than three years in keeping with the limits of Louisiana’s three-year law. Those customers may need to find new coverage at their renewal time.
Louisiana Citizens offers coverage for any property owner who cannot get coverage from a private company, even for storm-damaged homes, according to LDI.
The Louisiana Insurance Guaranty Association (LIGA) is responsible for claims from Hurricane Ida sustained by customers of Access Home and State National Fire and any other events prior to Dec. 1. LIGA can pay claims up to $500,000 per policyholder. SafePoint will cover any insurance claims made on or after Dec. 1.
Any Access Home or State National Fire customer with questions about their coverage should call SafePoint at 855-243-9740 or contact their insurance agent. They can also reach the receiver at 225-201-0107.
Any Access Home or State National Fire customer with questions about an insurance claim with a date of loss before Dec. 1, 2021, should contact LIGA at 225-277-7151 or go to https://www.laiga.org.
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