La. Legislature Completes 2004 Regular Session With More Reforms

July 6, 2004

The Louisiana Legislature wrapped up its regular session for 2004 on June 21. During the 2004 session, Louisiana lawmakers continued their reform of the insurance regulatory environment, aiming to bring additional insurers into the state to provide consumers with more insurance choices.

One significant bill passed by the legislature, House Bill 1514, provides for a file-and-use rating system for commercial insurance policies with premiums more than $100,000, and a flex-band system for commercial insurance policies less than $100,000 and when the deduction in rate change is less than 10 percent. HB 1514 was introduced by House Insurance Committee Chair Karen Carter, D-Orleans Parish, and was a product of compromise between the Louisiana Department of Insurance, the American Insurance Association and others.

The Property Casualty Insurers Association of America (PCI) noted that eleventh-hour political maneuvering added an amendment to the bill that would have prohibited insurers’ use of credit-based insurance scores, but senators voted to strip that prohibition from HB 1514.

In 2003 the legislature passed Senate Bill 721, establishing the flex band rating system, which allows insurers to modify their rates up or down by 10 percent without the approval of the Louisiana Insurance Rating Commission (LIRC). Bills introduced to negate that flex band model were rejected this year.

Legislators also rejected Senate Bill 215, which would have banned insurers’ use of credit information in establishing rates for homeowners and automobile insurance. Lawmakers passed legislation last year that placed some restrictions on insurers’ use of credit history.

According to the PCI, other P/C bills awaiting Gov. Blanco’s signature or veto include:

• HB 797, reducing premium taxes for insurers in an amount equal to the premium discounts provided to active military personnel.
• HB 1183, which requires insurers to pay agents unearned premiums or commissions due.
• SB 432, changing the amount of attorney fees on workers’ compensation awards to 20 percent of the recovered amount.
• HB 349, mandating actual payment by the insurer for there to be a claim against a homeowner’s or automobile policy.

Insurance bills already signed by the governor include:

• SB 359, limiting liability of health providers under the Medical Malpractice Act to $100,000 plus interest and costs.
• HB 521, prohibiting an insurer or agent from issuing a motorcycle policy unless the applicant has provided proof of endorsement.
• HB 1051, which provides for procedures for asserting claims against the Louisiana Insurance Guaranty Association involving asbestos exposure.
• HB 1135, outlawing automobile liability insurance and uninsured motorist insurance from limiting the coverage or potential recovery to any amount less than the highest policy limits for the named policyholder, the spouse or family member.
• HB 1361, which provides for the sale of insurance products by financial institutions.
• HB 1574, permitting insurers to make changes in the policy forms for homeowners insurance, provided they obtain prior approval of the insurance commissioner.

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