A Baton Rouge judge granted the Louisiana insurance commissioner’s motion to liquidate Lighthouse Property Insurance Co. late last month, marking the fourth insurer insolvency in the state in the wake of the 2020 and 2021 hurricane seasons.
Judge Richard “Chip” Moore III of the 19th Judicial District Court approved the motion by Commissioner James Donelon on April 28, concluding that “further efforts to rehabilitate Lighthouse Property Insurance would be futile and would result in loss to Lighthouse Property Insurance’s creditors and policyholders.”
Though Lighthouse had about 30,000 Louisiana property insurance policies and more than 16,000 claims related to Hurricane Ida in 2021, Donelon said the state’s insurance marketplace would be able to weather the loss of the company and deal with future storms.
““It’s frankly incredible how quickly the receiver, LIGA (Louisiana Insurance Guaranty Association) and my staff at LDI came together to manage the first three insolvencies and find a new insurer to take on all 55,000 policies,” Donelon told the Louisiana Record in an email. “We are now working just as hard to find insurers that are interested in taking on Lighthouse policies in the aftermath of its failure.”
Hurricane seasons in the coming years should be less catastrophic than what occurred over the past two years, he said.
“The past two hurricane seasons brought an unprecedented level of insured property damage, but I’m optimistic we will return to the quieter seasons we had in the 15 years following hurricanes Katrina and Rita,” Donelon said.
The Louisiana Department of Insurance (LDI) worked to bring in more than 30 new insurers into the state after major insurers lessened their exposure in the state’s coastal areas in the wake of the severe storms in 2005.
The legal proceedings for financially troubled Lighthouse will ensure that most policyholders who have pending hurricane claims will be compensated, according to LDI. Hurricanes Delta and Zeta in 2020 cost insurers $10.6 billion, while Hurricane Ida is estimated to cost insurers between $10 billion and $15 billion. The financial burdens caused the four insurers to exhaust their reinsurance coverage, LDI reported.
Prior to the Lighthouse liquidation, Donelon placed Americas Insurance Co. into receivership on Jan. 20. Last fall, he placed two other insurers – Access Home Insurance Co. and State National Fire Insurance, into receivership as losses from hurricane claims mounted.