because State Farm and Allstate withdrew from the market about 15 years ago. These smaller companies are quite vulnerable to liquidation when a catastrophe strikes in a limited area which is why A.M. Best usually gives a "B" rating to those companies.

The two companies being liquidated comprise about 1% of market share so it shouldn't create an insurance availability problem for Louisiana residents. The guaranty fund limits claims to $500,000 which is actually quite generous compared to other states. I recall that in Texas some policyholders were left holding the bag because the insurance guaranty fund covered a much smaller amount ($300,000 or the policy limit if lower) for claims.

It will cause some headaches to the policyholders that will have to find new insurers, but the private market appears to have sufficient capacity to underwrite the new customers and it doesn't look like the insurance market in Louisiana is going to collapse. It would be far more traumatic if the reinsurance companies decided to exit the Louisiana market.