BATON ROUGE, La. (BRPROUD)–The latest insurance company to go under is leaving Louisiana with over 1,300 additional claims to pay out.
Florida-based company, FedNat, is the most recent insurance company to lack the required funds necessary to cover its debts in Louisiana.
Florida state regulators decided that FedNat overstated its financial position when it left Louisiana in May.
The latest decision shows FedNat broke its promise to pay all open claims and this now leaves the burden on the state of Louisiana, which means the state’s Insurance Guaranty Association (LIGA) is responsible for coming up with millions of dollars.
“First, I would ask everybody to be patient as we have to obtain the documents from the insurance company to determine what is previously submitted and what has been paid,” said John Wells, LIGA’s Executive Director.
In order to make the payments, LIGA plans to borrow 600 million dollars in bonds. This is a 500 percent annual increase from what LIGA usually borrows.
Since Hurricane Ida, a number of companies have left Louisiana.
This puts the responsibility of 30,000 open claims on LIGA’s shoulders.
It’s for this reason, LIGA has hired an additional 100 employees to help divvy up the workload.
Louisiana Insurance Commissioner Jim Donelon said in a statement, “I am reaching out to Florida to get a clearer understanding of this development from a Louisiana point of view. My preliminary understanding is that it will have no effect on any Louisiana policyholder but may have LIGA implications relative to claims pending at the time of Florida’s action.”