Louisiana Insurance Commissioner Tim Temple has expressed gratitude to the state Legislature for passing a package of insurance reform bills he said would make the state’s insurance market more stable and competitive.
Temple said the recent passage of four bills, including one which will reduce financial penalties for insurers that engage in bad-faith activities, marks a “bold step” in addressing an insurance crisis that has caused rising insurance rates and several insurers leaving the state.
Those involved in the insurance industry expressed support for the reforms, though critics who testified before legislators said the measures could hurt consumers by reducing their leverage to challenge insurer decisions.
“Our association believes that the bills … are a very positive step,” Ben Albright, CEO of the Independent Insurance Agents & Brokers of Louisiana, told the Louisiana Record in an email. “The only way to bring long-term stability to our beleaguered property insurance market is to introduce more competition, and these reforms are an important part of the plan to attract new insurance companies to Louisiana.”
Among the bills that head to Gov. Jeff Landry’s desk is Senate Bill 323, sponsored by Sen. Kirk Talbot (R-River Ridge), which would change the bad-faith penalties insurers face if they violate the law. The current bad-faith law allows homeowners to collect twice the value of their loss through court proceedings, but SB 323 reduces the insurer penalties to not more than 50% of damages or $5,000 – whichever is the greater amount.
The bill would also require insurers to provide payments for catastrophic loss to homeowners within 60 days after proof of damage has been submitted. A breach for failure to pay would be subject to penalties if it is found to be “arbitrary, capricious or without cause,” according to the provisions of SB 323.
Another reform measure, House Bill 120 by Rep. Matthew Willard (D-New Orleans), would extend the Louisiana Fortify Homes Program beyond its current end date on June 20, 2025. That program empowers the state insurance commissioner to make grants so homeowners can retrofit roofs in order to better resist damage during severe storms.
Temple said the reform bills would lead to an “insurance renaissance” for Louisiana families and business owners.
“These bills provide real, proven solutions to the problems that have been plaguing our market – problems identified not only by the governor’s Insurance Policy Council and my Transition Advisory Team but also by the insurers and reinsurers that have been avoiding an increased investment in Louisiana for years,” Temple said in a prepared statement.
Another bill, SB 295 by state Sen. Heather Cloud (R-Turkey Creek), would streamline rate-filing requirements for property, casualty and liability policies. Under the measure, insurers would file rate information with the Louisiana Department of Insurance, and the filing would be deemed approved unless the commissioner determines the filing discriminatory or inadequate within 30 days.
The measure should not be interpreted as a means to create a new private cause for legal actions, according to the Legislature’s analysis of the bill.
HB 611 by state Sen. Gabe Firment (R-Pollock) would continue the state’s current ban on certain homeowner insurance cancellations or non-renewals for policies that have been in effect for more than three years. But Firment’s bill would delete a prohibition against increasing deductibles for such homeowner policies.
In addition, under HB 611, an insurer can file a plan with the commissioner to non-renew up to 5% of certain company policies within a calendar year.
Temple has also endorsed measures that would improve the state's legal climate.