La. Citizens Insurance loses big in $92.8 million judgment

by Heather Miller

In what will likely be the biggest insurance award following the hurricanes Katrina and Rita in 2005, the Louisiana Supreme Court has reinstated a $92.8 million judgment against the non-profit Citizens Insurance Corp. for waiting more than 30 days to adjust insurance claims for more than 18,500 homeowners in 2005.

The state-mandated Louisiana Citizens Insurance Corp., was hit with a $92.8 million bill Friday when the Louisiana Supreme Court reinstated a lower court award of $92.8 million to 18,573 residents who proved that the nonprofit insurance company was slow to adjust their claims following the 2005 hurricanes.

The Times-Picayune reports that Citizens, the insurer of last resort for residents who can't get private property insurance, waited more than 30 days to begin adjusting claims in 2005. The first stage of the case involves 18,573 homeowners who proved that Citizens delayed their claims, though 44,000 other Citizens policyholders have similar claims. If judgments are awarded in favor of those claimants, Citizens could be forced to shell out another $220 million.

Lawyers representing Citizens when the suit was filed in 2009 recommended that Citizens accept a settlement offer from the plaintiffs for $50 million. The board overseeing Citizens, however, declined the settlement, according to The Times-Pic:

The original March 2009 judgment by Judge Henry Sullivan of the 24th Judicial District Court in the case Geraldine R. Oubre et al v. Louisiana Citizens Fair Plan gave 18,573 homeowners $5,000 a piece because they could prove through Citizens' own records that the state-sponsored insurer of last resort waited more than 30 days to begin adjusting hurricane claims.

At the time, another 44,000 claims with similar disputes remained, meaning that the amount of money that Citizens has to pay could grow in subsequent phases of the case. If all of those claims were found to have merit, it could cost Citizens another $220 million in penalties.

[Louisiana Citizens chief executive] Richard Robertson, who started at Citizens in 2010 after the case began, noted that Citizens had more than 80,000 property damage claims after Katrina and Rita, and all but about 2,000 of them have been settled.

"It's important for people to understand that this lawsuit is now about damages; people have been paid (for their property losses). This is about penalizing Citizens for allegedly not starting the adjustment process after Katrina for more than 30 days after we were notified of the loss by the policyholder," he said.

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