Another large insurer is leaving Louisiana — here’s what it means

United Property & Casualty Insurance Co., based in Florida, will cease renewing its roughly 36,000 Louisiana home insurance policies in 2023. It is the largest company, in terms of the value of premiums written, to pull up stakes amid the state's widening insurance crisis.

Wednesday's announcement of UPC's departure didn't say why the company is leaving, though Insurance Commissioner Jim Donelon said in the summer that UPC's financial ratings had been downgraded.

The company had the fifth-largest share of Louisiana's home insurance market in 2021, at a little more than 3%, or $65.3 million in premiums. Southern Fidelity, which failed earlier this year, actually had more policyholders, but the value of the property it insured was less.

UPC's exit adds to a growing list of at least 23 companies that have recently withdrawn from Louisiana or gone insolvent. Altogether, the group held more than 200,000 policies, nearly a fifth of the state's market.

Many customers of those companies have been forced to purchase policies from Louisiana Citizens Property Insurance Corp., the state run-insurer of last resort. Since 2020's Hurricane Laura, Citizens' policy count has more than tripled to well above 100,000, and that number is sure to grow dramatically with UPC's departure.

Citizens' prices will also go up next year, by an average of about 63%, though in some parishes the increases will exceed 100%. Average premiums will be around $5,000 in at least seven parishes, including Orleans and Jefferson.

By law, Citizens sets its prices above market rates to push customers to shop for policies elsewhere. Donelon has used financial incentives to entice out-of-state companies to take up Citizens' policies, though many of them are small or unproven.

Though many of the insurers that took on Citizens policies have since failed, it's a strategy Donelon intends to employ again.

UPC must give customers a 30-day heads up before their coverage expires. About 3,000 policyholders whose coverage was set to expire between November and January will get a temporary extension. UPC is also responsible for handling any outstanding claims.

UPC was founded in 1999 and writes insurance in seven states other than Florida and Louisiana. In April, Donelon recommended fines totaling $250,000 against UPC after the Department of Insurance flagged 10 violations of Louisiana's insurance code.

That included the company's handling of claims and what the department said was a failure to monitor a third-party company UPC hired to manage its business operations. UPC disputed some of those claims, but it wasn't immediately clear if UPC filed an appeal. Company officials couldn't be reached Wednesday evening.