know about this ‘Disruptive’ Property Claim Tactics Emerge in Louisiana
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Property insurance costs have risen sharply in Louisiana, with homeowners already paying an average of $2,009 a year, or 45% above the national average, according to Bankrate.
Read more: Louisiana lawmakers scramble to address ailing homeowner market
Market sources told Insurance Business they were concerned the new marketing tactics would add to Louisiana’s insurance woes.
“We have seen a huge influx of out-of-state law firms using disturbing marketing practices that promise to recover large claims settlements before even examining the claim,” said Independent Insurance Agents & Brokers of Louisiana CEO Jeff Albright.
“These opportunistic law firms create unreasonable expectations for policyholders in the hope of ‘easy money’ and only increase litigation and the cost of claims.”
Established plaintiff and defendant attorneys at Pelican State told Insurance Business they’ve seen new players come in, particularly since 2021’s Ida.
The problem isn’t that there aren’t enough businesses in Louisiana to go around, according to plaintiff attorney Galen Hair, a partner at Insurance Claim HQ, but rather that recent entrants are using “aggressive” marketing tactics, including unsolicited text messages, space of television, letters campaigns and announcements of Tik Tok.
The messages have allegedly included that “your time to file a claim is running out” and that there is a “secret” way for policyholders to earn money with their insurance company.
Meanwhile, there is concern that law firms will focus on stepping in to pick up business and service claimants later, leaving policyholders left reeling from the impact of a hurricane struggling to move on.
“What I don’t think anyone is prepared for, from any economic or public good aspect, is when any company, let’s say, in Texas, for example, says ‘Okay, so what we’re going to do is come to New Orleans and let’s spend all the money we have to [in order] to pick up as many people as possible, and then we’ll figure out how to serve those people later,'” Hair said.
“These are legal services for people who have been affected by a disaster and are not paid well by an insurance company; It’s not an Amazon seller churning out the latest fidget spinner where they take a million orders and figure out how to make up for the delay. .”
The Louisiana State Bar has a nearly 50-page manual on how lawyers can and cannot market their services.
Several ads he’s seen from recent incoming out-of-state firms, Hair argued, have fallen short: “You can almost immediately verify that it’s inappropriate advertising,” Hair said.
Matthew Monson, founder of The Monson Law firm, a defendants’ practice, said he had seen examples of legal businesses or claims from “seven or eight” states entering the market, and that he, too, had seen “inappropriate” advertising.
In some cases, the ads Monson saw reportedly left claimants in the dark about which law firm they were signing up with until late in the process after they had completed a survey.
Monson was skeptical that the companies face harsh enough penalties for customer acquisition tactics, with some raising tens of millions of dollars at a time when the public could be “vulnerable.”
Some attorneys are “chasing storms” and may be using “improper” practices, Monson said, as they seek to collect fees. He said he was aware of one company that had swept away 7,000 claimants, a number he described as “insane” for Louisiana.
“The challenge with this is that they are taking the obscene profits that they are making in Florida and using it to literally attack other states,” Monson said of the influx of attorneys and adjusters.
“It’s on the backs of the average person who may not be able to afford another $1,000 a year for their insurance.”
Monson looked to Florida as an example of a market in even deeper crisis, saying he feared outsiders might try to move Louisiana in the same direction.
Read more: Florida and Louisiana in Crisis: A Tale of Two States
Seventy-nine percent (79%) of US homeowners insurance claims come from Florida, but claims in the state represent only 9% of homeowners claims nationwide , according to data from the Florida Governor’s Office. Carriers have been out in droves and rates have skyrocketed, even though the state hasn’t experienced a major hurricane since Michael in 2018.
Some market sources, including ratings agency Demotech president Joe Petrelli, have partially blamed Florida’s one-way attorneys’ fees statute for the distressed market’s appeal as a target of litigation.
Louisiana doesn’t have the same statute, but it does have late pay: “If you don’t pay your claims on time, and if you don’t pay the claim on time it’s because you’re acting arbitrarily, you’re subject to penalties of 50% of the amount that he should have paid, plus attorney’s fees,” Monson said.
Meanwhile, Louisiana remains the only state that prohibits public adjusters from charging contingency fees. The insurance industry deflected a change in this when Senate Bill 186 was withdrawn this summer, but Monson said he fears a more organized return of a similar bill next year.
“They can literally turn Louisiana into Florida,” Monson warned.