Insurance News

Citizens Can Post $95 Million Appeal Bond

Posted on: August 25, 2009

Louisiana?s top insurance regulator said Citizen?s Property Insurance Corp. will be able to post a $95 million bond so the state-backed carrier can appeal a crushing $92.8 million judgment.

Insurance Commissioner Jim Donelon said he was ?certain? it would not be necessary to assess Citizens? policyholders for the cash to appeal to the Louisiana State Supreme Court in a case involving Hurricane Katrina claims.

Mr. Donelon said that both Berkshire Hathaway and Travelers had offered the insurer ?reasonable conditions? to secure the bond.

In March, Jefferson Parish Judge Henry Sullivan ruled that Citizens owed the money to 18,573 policyholders with damage from the 2005 storm because there were delays in adjusting claims.

The commissioner said he was confident the appeal would succeed because three different lawyers had advised that Citizens has a very strong case.

Mr. Donelon noted that before the Jefferson Parish court?s ruling, the insurer had reached a $17 million settlement of the adjustment issues in Orleans Parish Court and that agreement should have ended such cases as a res judicata, what is known in law as a thing decided.

Citizens? attorneys had argued that as a public entity, they should not have to post bond in order to appeal, but Judge Sullivan denied their request.

On Wednesday, Mr. Donelon had said without posting a bond by Monday?s deadline, the plaintiffs in the pending class action could seize from Citizens? checking account the full amount of their judgment, which would leave only $5 million for continuing operations.

© Copyright 2009 National Underwriter Property & Casualty. A Summit Business Media publication. All Rights Reserved.

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