The Louisiana Department of Insurance (LDI) has ordered a New Orleans insurance to halt all business practices after investigators determined the company failed to remit premiums from two clients.
The move follows a joint legislative committee meeting at the Capitol where lawmakers expressed frustrations with insurance delays and failures associated with Hurricane Ida and other natural disasters occurring since the 2020 hurricane season.
“At least two customers have been harmed by the scheme and LDI is concerned there may be others,” Commissioner Jim Donelon said in a statement.
Investigators served cease-and-desist orders on the Citywide Insurance Agency of New Orleans two days after legislators grilled state insurance industry representatives and stakeholders Dec. 1. Donelon testified in the meeting.
The department announced the Citywide accountability effort Thursday. It includes license suspensions and $5,000 fines for violating the Louisiana Insurance Code.
After 30 days, the suspensions will become permanent revocations, the department said.
Hurricane Ida slammed into New Orleans on Aug. 29, causing mass power outages and billions of dollars in property damage across the southeast region.
According to the cease-and-desist order, one Citywide customer learned her homeowner’s insurance had been terminated when she attempted to file a claim for storm damage.
Another customer filed a complaint with the Insurance Department in November after discovering she did not have insurance coverage despite paying her required premiums, the order said.
The client “was unaware that her property was uninsured during most of 2021 because of your actions,” the order reads.
Both cases involve multiple instances of collecting premium money from the victims and then failing to purchase insurance products, the department said.
In one instance, investigators found Citywide insurance agent Vilia Ann Ragas issued “a fake certificate of insurance from a company that wasn’t even writing policies at the time.”
The cease-and-desist document further details how Citywide and Ragas had been issued cease-and-desist orders in 2006 in the aftermath of Hurricane Katrina, also for failing to remit premiums.
“As a result, Ragas and Citywide Insurance paid fines and lost their licenses for six months,” the document said.
Donelon said he is urging Citywide customers to contact their insurance policy carriers directly to verify coverage. He added individuals who feel “uneasy” about any insurance transaction related to Hurricane Ida and other natural disasters should call the department’s Insurance Fraud Division.
“If callers do not want their names used, they can request that their involvement be kept confidential,” he said.