Louisiana Bills Promote Private Flood Insurance, Target Staged Accidents

April 20, 2021

Louisiana insurance regulators have proposed separate pieces of legislation that would promote the writing of private flood insurance in the state and increase penalties associated with staged auto accidents. A third bill would expand the authority of the insurance commissioner to react in emergency situations.

Private Flood

The Louisiana Department of Insurance said House Bill 577, authored by Rep. Scott McKnight, would expand flood insurance choices for consumers beyond the National Flood Insurance Program and make it easier for private carriers to write flood insurance in Louisiana.

Under HB577, insurers could subsequently adopt new rates provided they file change paperwork with the LDI within 30 days of use. This hybrid “file and use” and “use and file” system for private flood insurance would last until Jan. 1, 2027, at which point it would revert to a traditional “prior approval” system unless otherwise extended.

All rates would be subject to regulation by the LDI with the same rigor as with its “prior approval” analysis of other property/casualty rates. The bill is modeled on a similar Florida law that has increased the market share of private flood insurance in that state.

Staged Auto

Another property/casualty-related bill backed by LDI is HB15, authored by Rep. Sherman Q. Mack, which targets staged auto accidents by asking for an increase of penalties and adding this activity to our state’s anti-racketeering statute for direct involvement in intentionally causing or fabricating an accident.

Parties such as planted witnesses, attorneys and doctors intentionally participating in such schemes would also be penalized.

The bill would also impose a mandatory minimum sentence of at least five years for the aggravated staging of a motor vehicle collision where another person was seriously injured.

Commissioner’s Authority

The department also is backing Senate Bill 29, sponsored by Sen. Mark Abraham, which seeks to streamline the existing authority of the insurance commissioner when the governor declares an emergency. LDI said the change would enable the insurance commissioner to react more quickly to emergency situations and safeguard the rights of policyholders during emergencies, such as when two hurricanes hit the Lake Charles area during the 2020 storm season.

Currently, the commissioner’s emergency power authority exists only when the governor explicitly grants it so that this bill would allow the insurance commissioner to issue emergency rules independently, limited to the duration and geographic area of the governor’s declaration and would expire when the governor’s emergency declaration expires.

All such emergency rules would still be subjected to oversight by the Legislature as defined in the Administrative Procedure Act.

Source: LDI

Topics Louisiana Flood

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