Louisiana insurance commissioner pushes for less litigation and free market, consumer advocates fear loss of protections

Shannon Heckt
·4 min read
2

BATON ROUGE, La. (BRPROUD) — Lawmakers look to tackle the property insurance crisis head-on with a slate of bills promised to bolster a free market while consumer advocates fear it will loosen protections for policyholders.

Insurance Commissioner Tim Temple is focusing on reducing the amount of lawsuits brought against insurance companies and untethering them from policies they’re tied to under the current policies.

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Two bills are being carried by the Insurance Committee Chairmen that would make changes to the timeline of when a claim can be made and when the company has to pay it out.

“There’s really no clear understanding of how we should be handling claims, or when the clock starts on what’s expected of the insurance companies from a time perspective on when you should make payment, when you should have the inspection completed. So the Texas model clearly defines those timelines,” said state Rep. Gabe Firment, R-Pollock.

Temple said the threshold to bring a bad faith claim against a company is low in Louisiana and drives away companies from writing policies, which he believes is one of the “root causes” of high premiums.

“If you can’t afford the product, then what good does it do you to go litigate against a product that you can’t afford? You don’t have it,” Temple said. “Availability will lead to affordability and that will help everybody in Louisiana.”

Louisiana has been racked with multiple named storms back to back in 2020 and 2021 that led to billions of dollars in damage. Since then about a dozen insurance companies have withdrawn from writing policies in the high-risk state. The state legislature and the past commissioner have been looking for ways to draw companies back or bring in new ones to take people off the constitutionally expensive insurer of last resort, Louisiana Citizens.

Another bill filed in this session would inhibit lawsuits against Louisiana Citizens for bad faith claims. But he said it does not take away someone’s right to sue if they feel a mistake has been made with their claim.

“Louisiana Citizens has no incentive to improperly adjust a claim. They have no incentive to pay less than what’s owed,” Temple said.

Consumer advocates have been pushing back against the idea of the state’s so-called three-year rule. Under current statute, a company cannot cancel or increase the policy deductible for a policyholder who has had three renewals with the company.

“We could have large numbers of Louisianans dropped from their policy and forced onto Citizens. That means they’re going to experience or suffer a steep rate increase. We’re not making Louisiana’s insurance crisis any better. If we make it more expensive and less available, which is exactly what phasing out the three-year rule would do,” said Ben Riggs, executive director of Real Reform Louisiana.

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House Bill 611 would phase out the law by allowing companies to cancel a small portion of their policies, or seek approval from the commissioner to cancel more. It also would prevent the three-year rule from applying to new policies going forward.

“We’ve got to give customers options. If they don’t have options, if they can’t go to an independent agent and shop for different policies that fit their needs. Insurance is never going to be affordable, especially in those coastal regions,” Firment said.

Temple claims that these consumer protections actually hurt them by companies being wary of taking on the three-year rule and not being in control of their rate and ability to cancel potentially risky policies.

“So when I hear insurance companies telling me we don’t want to look at your state because you’re the only one that has a three-year rule, that, I think, we as citizens are ultimately disadvantaged by that because that’s an insurance company that would probably want to come to write in Louisiana,” Temple said.

Louisiana has a working coast, meaning people with middle to low incomes live closer to the Gulf of Mexico where they have jobs, for example, oil fields, fishing, etc. People in those communities can benefit from the three-year rule by not losing coverage even if they are hit with storms year after year.

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“Three-year rule gives insurers an incentive because they’re wedded to those policies to work with local communities to actually help mitigate the risk,” Riggs said.

Temple is also throwing support behind mitigating those homes along the coast. The legislature has put millions towards the Fortified Homes program that provides grants to homeowners to build roofs that can withstand strong winds.

“We tend to have older homes. We have a lot of homes that are closer to the coast and we need to make sure that we’re mitigating against future damages,” Temple said.

Temple and the chairmen emphasize that what is being done to lower insurance premiums now is not working as people are losing their homes because they can’t afford it. Louisiana remains four times more likely to be hit by a hurricane than the surrounding states, which puts a high risk on homeowners.

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