Kennedy demands ruling on rate hikes

State Treasurer John Kennedy said he hopes to see Insurance Commissioner Jim Donelon request an Attorney General’s opinion on the legality of the method used to determine Citizens insurance rate increases for wind and hail coverage.

Kennedy, who sits on the Citizens Property Insurance Corporation board, said Tuesday that he has asked the state insurance commissioner to request the opinion “within a reasonable amount of time.” When pressed about how long that might be, he said about a week. If that timeframe passes, Kennedy said he would request the opinion himself.

He believes the 170 percent increase imposed on St. Mary Parish was arrived at illegally under state law. As he explained, the statute creating Citizens allows rates to be set in two ways: either 10 percent higher than actuarial rates or market rates in the given area.

When no private insurance is offered in a given parish, Kennedy said Citizens always has used actuarial rates.

This time, Citizens used “extrapolation” to determine rates, he said.

Essentially, they guessed what private insurance companies would charge if they offered insurance in a given parish and used those numbers. That is a third option that is not allowed under state statute, Kennedy concluded.

“I think they violated the law,” Kennedy said.

According to information prepared by the state Department of Treasury, coastal market increases versus actuarial increases per $100,000 building and $50,000 contents are:

—St. Mary, 170 percent ($1,990) versus 11 percent ($125).

—Cameron, 217 percent ($2,534) versus 11 percent ($125).

—Jefferson, 52 percent ($861) versus 8 percent ($133).

—Lafourche, 47 percent ($780) versus 8 percent ($133).

—Plaquemines, 52 percent ($861) versus 8 percent ($133).

—St. Bernard, 25 percent ($413) versus 8 percent ($133).

—Terrebonne, 52 percent ($861) versus 8 percent ($133).

“Here it is, right in the middle of hurricane season, and people are going to have to decide between their insurance and eating,” Kennedy said.

The rate increase can be reversed, but Donelon and Gov. Bobby Jindal both have to agree to do so, he said.

In an effort to do so, Kennedy advises residents to call Donelon’s and Jindal’s offices to express their displeasure.

In other action during Monday’s meeting of the St. Mary Industrial Group, Kennedy discussed his interest in a reduction of state consulting contracts.

Of the 19,000 contracts, “not a single one is as important as Nicholls, hospitals, the coastline or our roads,” Kennedy said.

Among them, he listed contracts to teach children organized play during recess for $94,000; educate the Hispanic community in Rapides and Natchitoches parishes of seat belt usage for $57,100; and state sponsorship in Chimpanzee Discovery Days, involving broad media attention to observation of chimpanzees in a spacious forestry habitat in Keithville for $10,000.

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