Louisiana homeowners insured by Florida-based UPC might have to find new coverage

Insurance Commissioner says only those with Freddie Mac-backed mortgages initially affected
Published: Aug. 16, 2022 at 11:03 PM CDT
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NEW ORLEANS (WVUE) - More Louisiana homeowners are at risk of losing their insurance and the state’s Insurance Commissioner is urging policyholders to take action.

Florida-based United Property and Casualty Insurance (UPC) is in the latest company to find itself in trouble and will stop writing new policies in Louisiana on Jan. 1.

“That is because their financial rating has been downgraded, to the point where they’re actually not eligible for Freddie Mac-backed mortgages,” Louisiana Insurance Commissioner Jim Donelon said.

Donelon said UPC’s new rating still is good enough for Fannie Mae-backed mortgages, so not all of UPC’s 37,000 Louisiana policyholders will be initially affected. But those with mortgages backed by Freddie Mac will be force-placed by the lender into much more expensive coverage.

“We’re going to allow those citizens, those policyholders, to shop for 60 days from the date of the notice of cancellation from their lender to find a company with a rating that would prevent them from being forced-placed,” Donelon said.

If they cannot find a new policy, Donelon said they’ll be able to get a Louisiana Citizens policy that has retroactive coverage back to the date of cancellation..

Donelon said the same goes for more than 10,300 Weston policyholders in the state, who will be cancelled Sept. 7.

“These two are not as threatening as what we just went through with Southern Fidelity, Lighthouse and Maison, from a numbers standpoint,” Donelon said. “We should be OK.”

So far, Donelon says about 131,000 policyholders across the state have been affected. Louisiana Citizens has gone from 50,000 policyholders to more than 100,000, adding about 400 new customers each day.

“They’re good for this season,” Donelon said. “Now, their challenge will be next year, if they still have those 100,000-plus policies.”

Donelon said if a severe hurricance hits, Citizens policyholders might be at risk of assessment, which means their premiums would go up.

Donelon said to avoid that, the state needs more companies to get back into the market. He said he hasn’t heard of any more potential company failures.

“Hopefully, we’ve seen the end of it, but I’ve said that before,” he said. “So, I don’t make any promises in that regard. But I’m cautiously optimistic that this is the end of it.”

Donelon said UPC policyholders need to open any correspondence from their mortgage company, in case it contains a notice of force-placed coverage. In that event, they should contact their agent immediately or call the Louisiana Department of Insurance at 800-259-5300.

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