Saturday, April 13, 2024

Louisiana Legislature passed several laws to enhance protections for insurance customers

by BIZ Magazine

By Victor Skinner | The Center Square contributor

Louisiana Commissioner of Insurance James Donelon recently outlined several new laws passed during the 2022 Legislative Session to enhance protections for policyholders and strengthen the state’s insurance market.

Donelon said at a Tuesday news conference that the changes were spawned by over 7,000 complaints during Hurricanes Laura, Delta, Zeta and Ida that covered more than 800,000 damage claims, as well as lessons learned from a half-dozen insurance companies that went insolvent in the aftermath.

Legislation in the so-called Catastrophic Reform Package included Senate Bill 264, now Act 69, sponsored by Sen. Joseph Bouie, D-New Orleans, to increase the minimum capital and surplus requirements for insurers licensed to write certain insurance policies.

Act 69 increases the minimum capital and surplus requirement for existing companies from $3 million to $5 million by the end of 2026, though Donelon said all existing companies operating in Louisiana have already met the threshold. The law, modeled after a similar provision in Florida, further increases the requirement to $10 million by the end of 2031.

“By having $10 million of their own money on the table, the expectation and hope … is those (insurers) will be more prudent … and less trying to maximize their profit,” he said.

Donelon also discussed House Bill 83, now Act 434, sponsored by Rep. Laurie Schlegel, R-Jefferson, that changes how insurance companies cover additional living expenses due to an evacuation. The coverage was previously triggered by an official emergency declaration, but some local officials did not issue an evacuation order due to the approaching speed of recent storms (Zeta’s forward velocity at landfall was 30 mph) and potential to create gridlock, resulting in some insurers voluntarily covering claims and others refusing to do so.

Act 434 replaces the requirement for an emergency declaration with consideration of the totality of circumstances, to ensure coverage in those unique circumstances.

Senate Insurance Committee Chairman Kirk Talbot, R-River Ridge, also attended the press conference on Tuesday to outline several successful insurance reform bills he sponsored in 2022.

“The main thing we wanted to do is make sure the insurance market is working better and also to attract insurance companies to Louisiana,” he said.

To address the latter, lawmakers approved Senate Bill 412, now Act 754, to create an Insurance Incentive Program to provide financial incentives to attract more insurance companies to do business in the state and in turn create a more competitive market.

The program, first used under then-Gov. Kathleen Blanco, passed the Legislature overwhelmingly, Talbot said, though he acknowledged that “funding is a big issue” that remains unresolved.

“That’s something we can address next session,” he said.

Talbot also discussed SB 198, now Act 263, to establish what’s commonly referred to as a three adjuster rule, which would require insurance companies to provide an update on claims, as well as a primary contact person, after a third adjuster is assigned during a catastrophe.

Talbot’s SB 163, now Act 80, would require specific disclosures for the catastrophic claims process that include an explanation of the claims process and how the insurer will communicate, explanation of the supplemental claim process, an explanation of the methodology used in calculations, an explanation of actual cash valuation versus replacement cost valuation, items necessary to document a claim, how to complain to the insurance department, and other details of the process.

House Insurance Committee Chairman Mike Huval, R-Breaux Bridge, attended the press conference to highlight HB 521, now Act 157, to require residential and auto insurance companies to file a catastrophic response plan with the Department of Insurance. The plans must include items like emergency contact, alterative work sites, and processes for claims processing that are subject to the approval of state officials.

Huval also sponsored HB 612, now Act 554, to create the Louisiana Fortify Homes Program under the Department of Insurance that allows homeowners to apply for grants to retrofit roofing to higher standards. The grants do not cover permits and come with some eligibility requirements, he said.

“If you can save the roof, there’s less chance for the interior of the home to be damaged,” Huval said, adding that the intent is to minimize storm damage “so they can come back home sooner.”

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