Louisiana officials announced the insurance reforms before the session

Posted at 2:21 am on Sat Apr 8 2023

(The Center Square) — Long-term solutions to Louisiana’s home insurance crisis will include funding for vaulted roofs and legal reforms aimed at cracking down on bad actors, officials announced Tuesday.

Louisiana Insurance Commissioner Jim Donilon held a press conference Tuesday with Senate Insurance Committee Chairman Kirk Talbot, R-River Ridge, and House Insurance Committee Chairman Rep. Mike Hoval, R-Breaux Bridge, to review legislative priorities for 2023.

Donilon said he is working with lawmakers to secure funding for Louisiana’s Fortify Homes program approved in the previous legislative session that will allow homeowners to apply for grants to retrofit roofs to higher standards.

Huval, who sponsored the legislation that created the program, explained that it will not cover the costs of permits or inspections, and comes with some eligibility requirements, but that “grants will cover the costs” of the roof work itself.

“We plan to ask for $20 million in the budget,” Hoval said, adding that he expects to launch the program quickly once funding is approved.

Lawmakers will also propose legislation to require insurance companies to provide a premium deductible for homes that modify roofs to comply with fortified homes or fortified commercial standards.

Other reforms focus on preventing unscrupulous companies from taking advantage of homeowners by taking litigation to file frivolous lawsuits on their behalf. Florida lawmakers recently took up the issue, and it’s now spilling over into Louisiana, where a Texas firm “fraudulently represented several hundred homeowners in the claims,” ​​Donilon said.

“The federal courts in southwest Louisiana and in the southeast corner of the state, these law firms have been running a lot in recent days,” he said.

Donilon said this practice raises prices and reduces options in the insurance market.

“While we are not copying what Florida has done legislatively, we are taking the lead in trying to introduce many of the legal reforms and claims processes that should strengthen our market over the long term,” he said.

The Huval-sponsored legislation would establish time frames for different steps in the claims process, allow insurers to require sworn proof of a statement of loss and set a two-year statute of limitations for policyholders to require fines and attorneys’ fees to pay claims early.

Other proposed bills would exempt Louisiana citizens, the state’s insurance company of last resort, from bad faith policies and penalties, and prevent homeowners from signing over their benefits to third parties without their insurance company’s approval.

“The allocation of benefits has been used by bad actors to commit insurance fraud,” Donilon said.

However, another proposed reform would not allow insurance companies to prevent homeowners from seeking a second opinion from the general adjuster on damages. The final bill would create a “clearer and fairer” framework for the appraisal process to quantify losses, which includes defining qualifications and duties for appraisers and judges and prohibiting unilateral contact with those involved.

“This package … is the most ambitious reform we’ve attempted in my 17 years as an insurance commissioner,” said Donilon.

The commissioner also highlighted progress in attracting insurers to the state through the Louisiana Insurance Incentive Program, which has received eight applications for funding. Lawmakers approved $45 million to be raised through grants to draw down $170 million in new premiums, half of which is written in southern Louisiana.

“I expect we will see 40,000 policies graduated from citizens by the end of the program’s first year, and an additional 50,000 policies written during that time,” he said.

Talbot said lawmakers would request about $20 million in additional funding for the program to meet demand.

“That should translate to … installments of about $250 million written in Louisiana, and I think 50% of that will be written under I-10 or I-12,” said Talbot.

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