Louisiana Insurance Commissioner Jim Donelon Reviews 2014 Legislation at September Property and Casualty Insurance Meeting

 

The Louisiana Property and Casualty Insurance Commission (“LPCIC”) met this month on the status of Louisiana’s residual and voluntary property insurance markets, the Louisiana Department of Insurance reported in its September 2014 newsletter.  As part of the agenda, Louisiana Insurance Commissioner Jim Donelon reviewed 2014 legislation impacting the state’s property and casualty markets.

Opening his first meeting as LPCIC Chairman, Lou Fey acknowledged the successful, long-term service of his predecessor, Ted Haik.  In his remarks, Mr. Fey noted that only one of the LPCIC’s 2014 recommendations to the Louisiana Legislature had been enacted.  He asked LPCIC members once again to support a hand-held cell phone ban for all Louisiana drivers and encouraged them to offer ideas on ways to lower property and casualty insurance rates.

Dave Thomas, CEO of Louisiana Citizens Property Insurance Corporation (“Citizens”), provided a comprehensive review of his organization’s broad efforts to minimize the risk of future assessments.  Citizens’ mission includes “providing for timely and fair claims processing within a culture of accountability and respect for policyholders, agents and the public at large.” 

Among Citizens’ accomplishments this year have been the establishment of a reinsurance program to insure against a 1-in-111 year hurricane (“or two ‘Gustavs'”), while paying only one deductible per season; measures taken to achieve successful Citizens depopulation to 98,000 policies, together with an anticipated further reduction in the current eighth round of takeouts; savings from bringing underwriting and claims handling in-house; and Citizens’ contractual provisions for catastrophe claims adjusters.

Louisiana Insurance Commissioner Jim Donelon noted that 2014 marks the ninth anniversary of Hurricanes Katrina and Rita.  He described a “journey of recovery” that he said was the joint effort of many, including legislators, two governors and various business groups.  He noted that some major insurers have retreated from Louisiana’s market, while others–including 21 companies new to the state–have actively sought greater market share.  The Commissioner pointed to the shrinking of Citizens’ policy count to a level below that of 2005 pre-Katrina as “the best barometer of the viability of our property and casualty market.”  He admitted that pricing continues to be a challenge for consumers, but judged Louisiana’s voluntary market as “more robust and competitive today than before Katrina.”

Turning to the subject of Louisiana’s recent Legislative Session, Commissioner Donelon stated that some progress was made and, more importantly, detriment to the state’s economic recovery was avoided.  He elaborated on one “well-intended” bill that he said would have had an adverse effect on the market by requiring admitted insurers authorized to write homeowners’ insurance to do so for any residence constructed or retrofitted to comply with the statewide uniform construction code.  The Commissioner praised several other bills, including ones authored by four legislators who are also members of the LPCIC:

• Senator Dan Morrish – Act 114 and Act 117
• State Representative Gregory Cromer – HR 42 and HB 700
• Senator Ronnie Johns – Act 458, SR 18 and Act 118
• State Representative Kirk Talbot – Act 559

LPCIC members received handouts listing 2014 property and casualty legislation, along with other bills filed that were part of the LPCIC’s 2014 legislative recommendations.  This prompted a lengthy discussion on the obstacles encountered, as well as the resulting lessons learned.  The group also discussed the dynamics of lowering the threshold whereby litigants can request a jury trial, which was one of the LPCIC’s defeated recommendations.

LPCIC member and Louisiana Workers’ Compensation Director Wes Hataway provided an overview of 2014 workers’ compensation legislation, detailing the significance of two enactments: 

• Act 375 streamlines what was described as a formerly unwieldy process of bringing into compliance some 30 percent of employers and companies that have been deemed as failing to meet Louisiana’s mandatory workers’ compensation insurance requirements.  Given a new computer tracking system, overall compliance is expected to improve, thereby creating a more “level playing field” for all. 
• HCR 99 calls for Louisiana’s State Board of Medical Examiners to study and make recommendations on addressing the over-prescription of pain medication that is believed to result in abuse, addiction and overdose-related deaths in the general populace.  Mr. Hataway stated that his office would find a way to address this problem within the workers’ compensation system over the coming year.

Mike Barron, who coordinates an impaired driving program for the Louisiana Highway Safety Commission, provided a handout detailing Driving While Under the Influence (“DWI”) legislation enacted this past Session.  He discussed three new laws that may contribute to lowering auto insurance rates through improved DWI enforcement:  

1)  Act 458 closes a loophole that allowed DWI offenders pleading Code of Criminal Procedure Article 894 to obtain an unrestricted driver’s license prior to successfully completing the conditions of their probation.  

2)  Act 385 re-organizes the existing DWI law to facilitate its application, which may lead to more successful prosecutions.  

3)  Act 299 requires all who are arrested for DWI to be fingerprinted.  This will create a record for each person, thus improving tracking, data and enforcement for the 70 percent who have not been fingerprinted in the past.

The next scheduled LPCIC meeting is December 4. 

 

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