With the scheduled adjournment date of June 19, Louisiana lawmakers will be taking action on several important issues in the next few weeks that have the potential of reshaping the state’s insurance marketplace, according to the Property Casualty Insurers Association of America (PCI).
“The ability to stabilize the state’s insurance marketplace following hurricanes Katrina and Rita is being threatened by legislation that would saddle insurers with excessive regulation, increase litigation and significantly impair their ability to conduct business,” said Greg LaCost, assistant vice president and regional manager for PCI. “These next few weeks will be crucial. We are urging lawmakers to send a positive message that says the state is committed to building a healthy insurance marketplace that encourages insurers to consider doing business in Louisiana.”
Although none of the major insurance bills have been sent to the governor’s office, there are several bills that have passed one chamber. Bills of special interest to insurers include SB 740, which extends by one year the time that a consumer has to file a claim resulting from hurricanes Katrina and Rita; SB 693, which repeals the flex-rating law; SB 707, which blurs the line between insurers’ responsibilities to their policyholder and third-party claimants and SB 620, which increases penalties for insurers that fail to timely pay claims.
This week HB 318, which would ban insurers from using 2005 credit information to underwrite or rate risks for persons who lived in a declared disaster area last year is expected to be debated on the House floor. “The concern this bill is attempting to answer is addressed under current law,” said LaCost. “Insurers are already required to exempt the use of credit information for consumers whose credit histories have been adversely affected by a catastrophic event. However, by imposing a blanket prohibition on the use of credit information for a specific time period will penalize many consumers who are currently paying lower rates based on their good credit-based insurance scores.”
Also this week, the House Insurance Committee is scheduled to reconsider HB 1358, which provides insureds with new ambiguous legal claims for which to file a lawsuit. “This legislation is likely to result in a flood of litigation and raise the cost of insurance,” LaCost commented. “HB 1358 does not rely on the established standards of negligence and liability. Instead the bill manufactures new standards that are unclear and will be nearly impossible to determine how to apply. This clearly is a bill to help plaintiff lawyers that will have the unintended consequence of putting up barriers to the insurance industry across the state of Louisiana.”