Legislative changes to address the insurance availability problem in Louisiana and to promote greater competition in the industry will be the crux of the National Association of Independent Insurers’ (NAII’s) aggressive agenda during the 2003 session. The legislative session begins on March 31.
NAII will be joining a newly created group, The Coalition to Insure Louisiana, to push proposals to modernize the state’s insurance laws and attract more insurance companies to the Louisiana market. The coalition includes insurer groups, individual companies, and a broad cross-section of businesses and professional organizations.
“Companies have found it difficult to conduct insurance business in the state because of its prior approval rate regulatory law, extremely high loss costs, rigorous statutory requirements of the FAIR Plan and the struggle to make a profit in recent years,” said NAII Counsel Greg LaCost.
To enhance the Louisiana market, NAII plans to trumpet several bills this session that would modernize the current rating and form filing system, reform the FAIR Plan, reduce the jury threshold limit, allow more flexibility in the cancellation provisions, prohibit glass companies from giving credit or rebates for deductible and eliminate the direct action statute.
“The NAII is pleased with many of the Louisiana Property and Casualty Insurance Commission’s legislative recommendations, and we plan to utilize many of them in our effort to improve the laws of Louisiana in the upcoming session to encourage a more competitive environment in the state,” LaCost said.
Specifically, NAII supports the modernization of the rating system for the state and the commission’s recommendation of a file-and-use and/or a flex-rating band—an important first step in streamlining the rate-making process in Louisiana.
“The prior approval law here often dictates what companies must charge customers, regardless of what is costs to insure them,” LaCost said. “This stringent rate and filing requirement is part of why Louisiana boasts the second highest average property premium in the nation—second only to Texas.
“Personal lines loss costs are rising even more rapidly than the average premium, and premiums are not able to adequately reflect losses here because of the inability to get rate filings approved on a timely basis. Insurance carriers are not seeing a great incentive to remain in a market in which auto and homeowners writers have not experienced a profit for at least five years.”
Other items on NAII’s 2003 legislative agenda for Louisiana include:
* Revise the Louisiana FAIR and Coastal Plans—the state-run plans of last resort— in a way to avoid a catastrophe fund, and still bring business back to Louisiana. Louisiana can be more competitive if the Fair Plan is allowed to provide self-sustaining rates, retain a reserve for possible catastrophes, and avoid large assessments against companies each time a hurricane occurs.
* Oppose two bills that would ban or restrict insurers from using credit to underwrite or rate coverage. The language of the two bills, HB 53 and HB 58, is similar. The bills state that it is an unfair business practice to use a credit report or credit-based insurance scoring to terminate or modify vehicle or home insurance coverage, or to not insure a consumer.
* Support for a substantial lowering of the monetary threshold for obtaining a trial by jury, which also has the support of the insurance commission. Currently, Louisiana law provides that unless the amount claimed is more than $50,000, a lawsuit must be tried in front of a judge. This law has driven certain companies away from the state in fear of the inability to have a fair and just trial by objective Louisiana citizens.
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