Claim Filing Extension Fought In Louisiana

The insurance industry is fighting measures in the Louisiana Legislature that would extend Hurricane Katrina claim-filing periods and repeal flex rating.

“The ability to stabilize the state's insurance marketplace following Hurricanes Katrina and Rita is being threatened by legislation that would saddle insurers with excessive regulation, increase litigation and significantly impair their ability to conduct business,” complained Greg LaCost, assistant vice president and regional manager for PCI.

With the current session due to end June 19, none of the major insurance bills have been sent to the governor's office. But there are several bills that have passed one chamber.

Bills of special interest to insurers include SB 740, which extends by one year the time that a consumer has to file a claim resulting from Katrina and Rita.

Other bills that insurers are lobbying against include SB 693, which repeals the flex-rating law, and SB 707, which according to insurers blurs the line between insurers' responsibilities to their policyholder and third-party claimants.

Carriers are also fighting SB 620, which increases penalties for insurers that fail to pay claims in a timely fashion.

This week HB 318, which would ban insurers from using 2005 credit information to underwrite or rate risks for persons who lived in a declared disaster area last year, is expected to be debated on the House floor.

“The concern this bill is attempting to answer is addressed under current law,” said Mr. LaCost. “Insurers are already required to exempt the use of credit information for consumers whose credit histories have been adversely affected by a catastrophic event.”

Imposing a blanket prohibition on the use of credit information for a specific time period will penalize many consumers who are currently paying lower rates based on their good credit-based insurance scores, Mr. LaCost said.

Also this week, the House Insurance Committee is scheduled to reconsider HB 1358, which provides insureds with new a legal basis on which to base a lawsuit. “This legislation is likely to result in a flood of litigation and raise the cost of insurance,” Mr. LaCost commented. “HB 1358 does not rely on the established standards of negligence and liability.”

He also asserted that the bill “manufactures new standards that are unclear and will be nearly impossible to determine how to apply.”