BATON ROUGE - State Treasurer John Kennedy today denounced a vote by the board of Citizens Property Insurance Corporation to raise the pay of its top executive by $50,000 while the company is reporting record losses and considering imposing new fees on every homeowner insurance policy in Louisiana.
"I am aghast that the Citizens Insurance board made this decision without letting the public know in advance and in the midst of some of the worst financial circumstances the company has ever faced," said Treasurer Kennedy.
The company's Chief Executive Officer had his pay raised from $240,000 to $290,000 plus benefits, subject to the approval of the Commissioner of Insurance. As a member of the Citizens Board of Directors, Treasurer Kennedy voted no to the pay raise motion - which was brought up at the end of the meeting and without prior public notice - and is calling on Commissioner of Insurance Jim Donelon to exercise his power to veto the raise.
"Our CEO is a good man and has been doing the best he can to keep this company afloat, so this is not a personal criticism of him," said Treasurer Kennedy. "It's just that the timing and circumstances of this vote are horrible in light of the serious financial straits the company is in."
Also at the November 8th meeting, the board was informed that the company would be filing a report with the Department of Insurance that Citizens Insurance is insolvent due to its liabilities exceeding its assets by $56 million due to recent storms and litigation. "This company is broke," said Treasurer Kennedy. "If this were a private company, Citizens Insurance would be taken over by the Department of Insurance and placed in bankruptcy."
At the same meeting, Treasurer Kennedy voted no to raise premiums on 5,700 commercial policyholders by 45 percent. The board was also informed the company may impose a new surcharge fee on every homeowner insurance policy in Louisiana - not just policyholders of Citizens Insurance. This past May, the board imposed a significant rate increase - as high as 217 percent - on storm-impacted coastal parishes with no other private sector insurance options.
If Commissioner Donelon can't see fit to reverse this decision, I will ask the full board to reconsider this at the next meeting," said Kennedy. "This was a Great Dane-sized whiz down the leg of every taxpayer and policy holder in the state."