Louisiana officials announced insurance reform before the session
Published at 2:21 am Saturday, April 8, 2023
(Center Square) – Long-term solutions to Louisiana’s homeowner insurance crisis will include funding for protected roofs and legal reforms aimed at cracking down on bad actors, officials announced Tuesday.
Louisiana Insurance Commissioner Jim Donnellon held a news conference Tuesday with state Sen. Kirk Talbot, R-River Ridge, chairman of the Senate Insurance Committee, and state Rep. Mike Huval, R-Breaux Bridge, chairman of the House Insurance Committee, to preview legislative priorities for 2023.
Donnellon said he is working with lawmakers to secure funding for the Louisiana Fortified Homes program approved in the previous legislative session that would allow homeowners to apply for grants to restore high-quality roofs.
Huval, who sponsored the legislation creating the program, explained that it would not cover the costs of permits or inspections and comes with few eligibility requirements, but “the grants would cover the costs of the roofing work.”
“We plan to ask for $20 million in the budget,” Huval said, adding that he expects the program to be up and running quickly once funding is approved.
Lawmakers will propose legislation mandating insurance companies offer a premium discount for homes that restore roofs that meet Safe Home or Safe Commercial standards.
Other reform centers demand that unscrupulous companies take advantage of homeowners and file frivolous lawsuits on their behalf. The problem was recently addressed by Florida lawmakers and is now spreading to Louisiana, where a Texas firm is “fraudulently representing hundreds of homeowners in claims,” Donnellon said.
“Federal courts in southwest Louisiana and the southeast corner of the state have taken those law firms to task significantly in recent days,” he said.
Donelon said the practice raises rates and reduces options in the insurance market.
“While we are not copying what Florida has done legislatively, we are leading efforts to introduce several legal and claims process reforms that should strengthen our market over the long term,” he said.
The legislation sponsored by Huval would establish deadlines for various steps in the claims process, and would require insurers to provide sworn proof of loss statements and establish a two-year statute of limitations for policyholders to seek fines and attorney fees for untimely payment of claims.
Other proposed bills would exempt Louisiana Citizens, the state’s insurer of last resort, from bad faith policies and penalties and prevent homeowners from signing over their benefits to third parties without their insurer’s approval.
“Benefit assignment has been used by bad actors to commit insurance fraud,” Donnellon said.
Yet another proposed reform would give insurers a disclaimer to prevent homeowners from asking a public adjuster for a second opinion on damages. A final bill would create a “transparent and fair” framework for the assessment process to determine the amount of damages, including setting qualifications and duties for assessors and umpires and prohibiting one-sided communication with stakeholders.
“This package … is the most ambitious reform we’ve tried to achieve in my 17 years as insurance commissioner,” Donnellon said.
The commissioner also highlighted progress in luring insurance companies to the state through the Louisiana Incentive Program, which received eight applications for funding. Lawmakers approved $45 million in grants to draw $170 million in new premiums, half of which will be written in South Louisiana.
“I expect by the end of the first year of the program we will see 40,000 policies coming out of Citizens and an additional 50,000 new policies will be written during that time,” he said.
Talbot said lawmakers would seek about $20 million in additional funding to meet the demand.
“That should translate … to about $250 million in premiums written in Louisiana, and I think 50% of that will be written down I-10 or I-12,” Talbot said.