View this article online: https://www.insurancejournal.com/news/southcentral/2006/05/04/67923.htm
As the Louisiana Legislature considers a wide array of legislative proposals, many of which would be detrimental for consumers, the Property Casualty Insurers Association of America said it is telling lawmakers that the best way to respond to last year’s hurricane season is to adopt reforms that will promote a healthy, competitive insurance marketplace.
The Louisiana Senate Insurance Committee approved legislation (SB 620) that would increase penalties for insurers that fail to pay a valid claim within 30 days. In addition, the House Insurance Committee approved House Bill 1056 that would require the licensing of all claims adjusters. These and several other bills that would raise rates for consumers and have the potential to drive insurers from the Louisiana market have now advanced to the floor in both the Louisiana House and Senate, according to PCI.
“Lawmakers are under tremendous pressure to help consumers, but reverting to an excessive regulatory environment will have the opposite effect,” said Greg LaCost, assistant vice president and regional manager for PCI. “The key to helping consumers in the wake of this past hurricane season is to reassure insurers that the market will be viable so that private market carriers will be able to meet their obligations. Actions speak louder than words. If much of the legislation that is advancing this session gets enacted, it will be like hanging a sign that says closed to insurers at the state’s border.”
The bill that advanced today in the Senate committee (SB 620) would increase the penalty for failure to timely pay a claim from 25 percent of the damages owed to 50 percent as well as reasonable attorney fees and costs. “Insurers try to resolve and pay claims on a timely basis and this is a misguided effort to punish insurers,” said LaCost. “This contributes to an approach that over emphasizes litigation. While the state had improved its punitive damage statute, this is a disturbing sign that some lawmakers are interested in going back in time.”
On the House side, HB 1056 requires licensing of claims adjusters and claim adjuster firms with the commissioner of insurance prior to conducting business in the state. However, this bill would require the licensing of both internal company adjusters as well as independent adjusters. If this bill were to pass, Louisiana would join only 16 other states that requires licensing for internal adjusters.
“At a time when legislators are being price sensitive, they should take into account that this measure would increase costs to the tune of $4 to $5 million per year and not benefit consumers,” said LaCost. The bill also has the potential to slow down the process of bringing in out-of-state adjusters during a catastrophic event. This is the precise time we need to have streamlined processes in place. We are continuing to push for changes to this legislation and an exemption for internal adjusters.”
Other legislation that PCI is opposing includes HB 318 that would ban the use of credit information in underwriting and rating, SB 693 that would repeal the flex-rating law that was implemented in a previous session, and SB 740 which would increase litigation and give consumers until 2007 to file claims arising out of hurricanes Katrina and Rita. All of these bills are pending action on either the House or Senate floor.
Source: PCI