Risky Business: Weak Insurers Absorbing Louisiana Citizens’ Policyholders

Members of the board that oversees the Louisiana Citizens Property Insurance Corp. were primed for a discussion that nobody wanted to have.

It took the public insurer more than a decade to trim the number of risky policies it was holding to less than 40,000, through a process called depopulation. But over the span of a few months, after the collapse of a dozen insurers, more than 80,000 policyholders had come rushing back into Citizens’ arms.

The first board meeting of 2023 was an opportunity to consider something members might have overlooked.

In the previous depopulation effort, four of the insurers that helped reduce Citizens’ rolls were allowed to participate even though they fell short on the required financial stability rating -- and they ultimately collapsed.

Seated in the quiet confines of a meeting room in Baton Rouge, the board had to decide if similarly situated companies should be allowed to do it again this year. The pattern of failures was hard to ignore.