Donelon blasts revival of $92M award vs. Citizens

Published Dec 20, 2011 at 3:24 pm (Updated Dec 20, 2011)

Louisiana Insurance Commissioner James Donelon says he will ask the state's highest court to reconsider its reinstatement of a $92.8 million judgment against state-backed Citizens Property Insurance Corp. for its slow adjustment of policyholder claims after hurricanes Katrina and Rita in 2005. During a news conference in Baton Rouge today, Donelon said the Louisiana Supreme Court's ruling on Friday was "unconscionable" and legally deficient. A state appeals court reversed a Jefferson Parish judge's decision in 2009 to award $5,000 apiece to more than 18,000 Citizens policyholders. But the Supreme Court overturned the appeals court's ruling by a 4-3 vote. The court's majority agreed with the judge that plaintiffs were entitled to the awards because Citizens failed to start adjusting their claims within 30 days, as required by state law. "The penalties involved are not for insufficient claim payment, but rather as a penalty for not initiating claim adjustment within 30 days from the most horrific storm to strike the state. Citizens did send out advance Additional Living Expense checks to its policyholders within 30 days to help them offset the expenses of evacuation, or finding other living accommodations, yet the court viewed this as not being enough to satisfy the requirement," Donelon says in a release sent out following the press conference. "Ultimately, all property insurance policyholders in Louisiana will bear the cost of these class action lawsuits if Citizens has to implement an assessment to pay them or not." You can read more from Donelon on the issue here.