Louisiana Insurance Commissioner Tim Temple said a plan that tackles a property insurance crisis is moving forward after legislators approved four bills, including one eliminating rules largely prohibiting carriers from dropping policyholders who stayed with them at least three years.
Another bill tightens rate decision deadlines. A third adjusts claims payment periods and limits how penalties are paid for breach of duty. A fourth bill makes the Louisiana Fortify Homes Program permanent.
Temple called the passage of S.B. 323, S.B. 295, H.B. 611 and H.B. 120 a “bold first step in addressing the insurance crisis that most Louisianans have been facing for several years.
“These bills provide real, proven solutions to the problems that have been plaguing our market,” he said, including by insurers and reinsurers that have avoided an “increased investment in Louisiana for years.”
Temple said he thinks the bills will create a competitive, stable, state insurance marketplace.
H.B. 611 phases in an end to the state’s unique three-year rule, which prohibits a property carrier from nonrenewing a homeowners policyholder who is up to date on payments once the policyholder has been with the carrier for three years.
The bill cleared the state Senate in a 26-9 vote and was set for concurrence in the House on April 29.
H.B. 611 allows an insurer to file a plan with the commissioner to nonrenew up to 5% of policies statewide, as long as no more than 5% are in a single parish.
It also caps deductibles at 5% of a dwelling’s replacement cost value, unless the insured requests a higher amount. Previously deductibles in place more than three years were capped at the same amount throughout a policy’s life, with certain conditions such as timely premiums payments and limits on the number of claims within a set span of time.
S.B. 295, which changes some property/casualty and liability rate filing requirements, was nearly unanimously passed in the Senate in March and the House on April 24. Under the bill, rates and information submitted by carriers will be considered approved unless the commissioner notifies them otherwise within 30 days of receiving a filing.
Currently the department has more leeway on deciding if a rate filing is complete and starts a waiting period once an application is deemed sufficient to decide.
Also under S.B. 295, if a rate filing is determined to be inadequate or unfairly discriminatory, the commissioner may direct the insurer to collect additional premium or issue a refund for the difference.
A third bill, S.B. 323 addresses property/casualty and liability policy claims. It defines “catastrophic loss,” “immovable property,” and “residential property” and gives carriers 14 days from a notice of a non-catastrophic loss to start loss adjustments on property damage claims and claims for “reasonable” medical expenses.
Insurers have 30 days to start the process after a catastrophe, but that span can be extended by state officials when necessary. They have 60 or more days to pay a catastrophic loss on a residential property or 90 days or more on immovable property, after receiving satisfactory proof of loss.
S.B. 323 also delineates penalties for non-compliance. It protects the Louisiana Insurance Guaranty Association and Louisiana Citizens Property Insurance Corp. from a class action related to claims and the Guaranty Association from special damages or penalties.
The bill subjects property damage insurance claims to a two year liberative prescription period.
H.B. 120 makes the state Fortify Homes Program permanent but doesn’t identify a funding source, according to an attached note by the Legislative Fiscal Office.
The office anticipates the program will award grants totaling $25 million this year to 2,500 homeowners who upgrade to Fortified Roof standards. It recommends $5 million for the program for the 2025 fiscal year. “Future resources will be subject to legislative appropriation or action,” it said.
The program opened its first round of grants in October for property owners hardening homes against severe storms by repairing or replacing roofs to Insurance Institute for Business & Home Safety standards. Half of the grants were for Citizens policyholders.
The state created the program after seeing its success in Alabama, where thousands of homes have been hardened against hurricanes and tornadoes. The $30 million approved for the fortify program in Louisiana in 2023 was a 50% increase over the amount then-Insurance Commissioner Jim Donelon discussed when planning for the legislative session.
The top five writers of homeowners multiperil insurance in Louisiana in 2022, based on direct premiums written, were: State Farm Group, with 24.76% of market share; Allstate Insurance Group, 14.45%; Liberty Mutual Insurance Cos., 7.69%; USAA Group, 7.23%; and Louisiana Farm Bureau Mutual Insurance Co., 4.72%, according to BestLink.