The extension, negotiated by Insurance Commissioner Jim Donelon, will give Southern Fidelity customers until September 13 to find a new policy, or sign with Louisiana Citizens, the state’s insurer of last resort, WVUE reports.

The liquidation of Southern Fidelity comes about two weeks after policies with Lighthouse Excalibur and Maison were also canceled, bringing the total number of companies to leave Louisiana to seven.

“We did that through Citizens, our market of last resort, where most of these policyholders will end up having to get coverage … because a great majority of property insurers have stopped writing new business in the coastal area of our state,” Donelon told KTAL.

Donelon said Citizens now covers about 82,000 policies, up from about 35,000 before Hurricane Laura, and he expects that figure to continue to grow to 95,000. The recent cancellations have overwhelmed the state insurer’s two computer servers, prompting officials to negotiate the extensions and increase capacity for one server, he told WVUE.

The extensions come as the Louisiana Insurance Guaranty Association seeks approval this week from the State Bond Commission to sell $600 million in bonds to pay policyholder claims of insolvent insurers.

The association typically assesses a 1% levy on written premiums of remaining insurers to cover outstanding claims from companies that go under, which generates about $100 million a year, John Wells, LIGA’s executive director told NOLA.com.

Despite assessments in December and April, Wells said it hasn’t been enough to keep pace with the influx in claims. The association is accustomed to covering a few dozen claims from the one to three insolvencies each year, but with seven failures in the last year the LIGA now has a backlog of more than 10,000 claims and expects another 17,000 more from Southern Fidelity.

The LIGA board agreed in June to issue bonds with an interest rate not to exceed 6% with a plan to pay the money back through assessments over 12 years. Insurers can deduct up to 10% of their tax bill until the money is recovered, which effectively passes the cost to taxpayers.

“This is a reasonable approach — it’s not ideal. At some point, somebody’s got to pay the piper with interest,” Robert Hartwig, who directs the Risk and Uncertainty Management Center at the University of South Carolina, told NOLA.com. “Ultimately, this is going to cost more than it would have if these insurers had never gone bankrupt because interest is going to have to be paid on this obligation.”

The State Bond Commission is scheduled to meet on Thursday.