Louisiana Law Reminds Residents To Seek Insurance Rebates

A new Louisiana law to encourage residents to seek refunds from the Louisiana Citizens Property Insurance Corp. took effect this week, along with another insurance-related law increasing the amount paid on claims covered by the Louisiana Insurance Guaranty Association.

Act No. 345 (formerly HB 44) is designed to make property insurance policyholders aware that they qualify for rebates from the state’s insurer of last resort. According to the law, at the time of issuance or renewal of a property insurance policy, each insurer must include in the policy information on the electronic link to the form designated by the Department of Revenue to received a refund from the state after its payment by the insured for the amount of any surcharge, market equalization charge or other assessment levied by Citizens due to Hurricanes Katrina and Rita.

Insurance Commissioner Jim Donelon’s office said policyholders have paid assessments to help finance $1 billion in bonds that were issued in the aftermath of the hurricanes to keep the state-run insurer of last resort solvent. If monies are not claimed by the end of the year, policyholders will no longer be able to seek rebates.

Meanwhile, Act 595 (formerly SB 268) increases the maximum amount paid on claims covered by the Louisiana Insurance Guaranty Association from $300,000 to $500,000 per accident or occurrence other than a workers’ compensation and unearned premiums.

“This act is based on the National Association of Insurance Commissioners model act,” said Commissioner Donelon. “This is a plus for those involved in claims against failed insurers since a higher maximum payment per claim is now provided.”

The act also limits the assessment to member insurers to a maximum of 1 percent of net direct written premiums for the preceding calendar year. It allows the state insurance guaranty association to work with other states’ guaranty associations to resolve claims in the event of a multi-state solvency. It also adds a consumer representative to the board of directors.

Finally, consumers can no longer be penalized when they want to cancel an insurance policy before it expires. According to the Commissioner, some companies previously assessed a 10 percent surcharge when a policyholder terminated his or her policy early. But Act 169 (formerly SB 246) requires that following a cancellation, an insurer must return to the former policyholder an unearned portion of the premium paid, and any unearned commission within 30 days. The law does not apply to surplus lines insurance carriers.