Louisiana officials announce insurance reforms ahead of session
Posted at 2:21 a.m. on Saturday, April 8, 2023
(The Center Square) — Long-term solutions to Louisiana’s home insurance crisis will include funding for fortified roofs and legal reforms to crack down on bad actors, officials said Tuesday.
Louisiana Insurance Commissioner Jim Donelon held a press conference Tuesday with Senate Insurance Committee Chairman Sen. Kirk Talbot, R-River Ridge, and House Insurance Committee Chairman, Rep. Mike Huval, R-Breaux Bridge, to present legislative priorities for 2023.
Donelon said he was working with lawmakers to secure funding for a Louisiana Fortify Homes program approved in the previous legislative session that would allow homeowners to apply for grants to upgrade the roof to higher standards.
Huval, who sponsored the legislation creating the program, explained that it will not cover the costs of permits or inspections, and that it comes with certain eligibility requirements, but that “grants will cover the costs” of roofing works themselves.
“We plan to request $20 million in the budget,” Huval said, adding that he expects the program to launch quickly once funding is approved.
Lawmakers will also propose legislation to require insurance companies to offer a discount on premiums for homes that retrofit roofs to meet walled or commercial walled home standards.
Other reforms aim to prevent unscrupulous companies from taking advantage of landlords by taking on claims to bring frivolous lawsuits on their behalf. This issue was recently addressed by Florida lawmakers and is now spreading to Louisiana, where a Texas company is “fraudulently representing several hundred homeowners in claims,” Donelon said.
“Federal courts in southwest Louisiana and the southeast of the state have taken these law firms seriously in recent days,” he said.
The practice, Donelon said, drives up rates and reduces options in the insurance market.
“While we are not copying what Florida has done legislatively, we are taking the lead in introducing several legal and claims process reforms that should strengthen our market over the long term,” he said. .
The Huval-sponsored legislation would establish time limits for different stages of the claims process and allow insurers to require an affidavit of proof of loss and establish a two-year statute of limitations for policyholders to claim penalties and attorney’s fees for untimely payment of claims.
Other bills would exempt citizens of Louisiana, the state’s insurer of last resort, from bad faith policies and penalties, and prevent landlords from assigning their benefits to third parties without their insurer’s approval. .
“The assignment of benefits has been used by bad actors to commit insurance fraud,” Donelon said.
Another proposed reform would prohibit insurers from preventing homeowners from asking a public expert for a second opinion on damages. A final bill would create a ‘clearer and fairer’ framework for the valuation process to determine the amount of losses, which includes defining the qualifications and duties of valuators and arbitrators and prohibiting communication unilaterally with those involved.
“This package … is the most far-reaching reform we have attempted in my 17 years as insurance commissioner,” Donelon said.
The commissioner also highlighted progress in attracting insurance companies to the state through the Insure Louisiana incentive program, which received eight applications for funding. Lawmakers approved $45 million to be leveraged through grants to attract $170 million in new premiums, half of which will be written in South Louisiana.
“I predict we’ll see 40,000 policies coming out of Citizens by the end of the program’s first year, and an additional 50,000 new policies written during that time,” he said.
Talbot said lawmakers will seek about $20 million in additional funding for the program to meet demand.
“That should translate to … about $250 million in written premiums in Louisiana, and I think 50% of that will be written below I-10 or I-12,” Talbot said.