The Louisiana Department of Insurance’s recent clarification how insurers may use absolute pollution exclusions on commercial lines policies, is expected to ease industry concerns over the application of previously published claims handling guidelines. The department’s clarifying letter was issued in response to concerns raised by the American Insurance Association (AIA) and addressed guidelines published in a 1997 Advisory Letter from the department.
“AIA is very pleased to see this issue finally resolved. We have been working closely with the department and other interested parties such as the independent agents for a number of years now on an appropriate definition for absolute pollution exclusions and fair guidelines for their use in commercial policies,” said John Marlow, AIA assistant vice president, southwest region.
“This letter clarifies that any claims handling guidelines contained in previous advisory letters or other department directives are not applicable to the 2001 ISO absolute pollution exclusion approved by the department for use in the state,” Marlow said.
This letter of clarification is related to 2001 Advisory Letter 01-01 and 1997 Advisory Letter 97-01 addressing the use of pollution exclusions. Advisory Letter 01-01 is not applicable to previous versions of the pollution exclusion; therefore, insurers using the new exclusions do not need to refer to Advisory Letter 97-01 in the course of handling claims. New exclusions should have been incorporated into new or renewal policies by June 30, 2002. If claims handling concerns arise under the new exclusions, the department will handle them through the usual complaint and/or market conduct procedures.
“AIA views this action as a very positive development in the effort to bring Louisiana more into the regulatory mainstream, which should result in more insurers entering the market. Acting Commissioner Wooley is to be commended for his leadership in resolving this very complex, and at times contentious, issue,” Marlow said.
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