|December 13, 2013|
|Topic:||Louisiana DOI to Require Filing of Analysis of Wind Credits|
|Lines Affected:||Residential Property Insurance (see definition in bulletin and specific exemptions of commercial and surplus lines carriers)|
The Louisiana Department of Insurance has issued Bulletin No. 2013-08 to require authorized residential property insurers to file an analysis of wind mitigation credits, wind exclusion credits, and deductible credits starting January 1, 2014. Insurers that do not anticipate making a rate filing between January 1, 2014 and December 31, 2014 should make an informational filing by December 31, 2014.
Bulletin No. 2013-08
On December 12, 2013, the Louisiana Department of Insurance (DOI) issued Bulletin No. 2013-8. The bulletin was issued in response to the wide variety of wind-related credits being used in the industry after the 2005 hurricane season. According to the DOI, wind loss expectations for hurricanes and named storms have changed since 2005 and have rendered premium credits related to the wind peril inaccurate.
In Bulletin No. 2013-8, the DOI:
- references several rating statutes and regulations, along with the Casualty Actuarial Society’s Statement of Principles Regarding Property and Casualty Insurance Ratemaking, as sources that residential property insurers may use in determining whether their rates and credits are actuarially sound or not unfairly discriminatory; and
- requires property and casualty insurers with DOI-approved residential property programs to file with the DOI an analysis to determine the actuarial adequacy and appropriateness of approved all-peril deductible credits, wind-only deductible credits, wind exclusion credits and wind mitigation credits. Insurers may make either an informational filing or a rate filing containing the analysis. The analysis should consider catastrophe modeling, geographic variations within the state, logical consistency across the spectrum of approved deductible credits, differences in indicated credits by amount of insurance and other relevant considerations.
For purposes of this bulletin, the term “residential property” includes fire and extended coverage insurance and homeowners insurance for one-or-two-family owner-occupied premises and insurance policies written to cover owner-occupied manufactured/mobile homes. The term does not include commercial properties or unauthorized/surplus lines insurers.