State Sen. Jeremy Stine, R-Lake Charles, District 27, promised to give Baton Rouge storm victims a voice if elected in 2021. He entered the legislative session intent on creating real reform, shedding light on the industry. and protect consumers, he said, particularly the customer experience of filing a claim and receiving payment of what they are owed.
“He knows all the delay tactics and changing adjusters that were put in place after the hurricanes,” Stine said. “My goal was to deter bad actors.”
Senate Bill 208, which would increase bad faith penalties paid by insurance companies from 50 percent to 100 percent, was particularly controversial.
In Louisiana, in addition to the loss of value of the claim, the insurer may also be subject to a penalty of up to 50 percent of the amount owed to the insured. The increased penalty for bad faith could, perhaps, deter bad actors. It also had the potential to drive insurers out of the statew, limiting competition among providers and reducing choices for consumers.
“There is a real concern that too many insurers are pulling out of the state,” Stine said. “It’s happening now in Florida. We needed to get your attention. They can no longer deny or delay payment of these claims that they are contractually obligated to pay. But we had to strike a balance.”
Hearing all sides of the debate was important and revealing.
“A lot of times the owner’s perspective got lost in this conversation,” Stine said. “That was frustrating. It was important to me that he stay ahead of the game.”
The balance struck was to suspend the proposed increase in penalties until more data could be collected. Senate Resolution 140 directs the Commissioner of Insurance to study the problem of insurers failing to pay property damage claims on a timely basis after a presidentially or gubernatorially declared disaster or emergency and report his findings and recommendations to the Committees Senate and House Insurance Board in February 2023.
“Hopefully we have better data that this is the right way to go,” Stine said.
While Stine says he’s generally pleased with the outcome of the storm victims’ insurance reform package (11 instruments created, co-authored or sponsored), he says he sees the Hurricane Mediation Program and adjuster database of claims across the state as clear wins for consumers. Stine said the statewide claims adjuster database will be a more modern and user-friendly database that will allow the consumer to more easily search for information, including any administrative actions taken against the claims adjuster.
“Previously, this option was available but difficult to use, hard to find and confusing for some consumers,” Stine said.
With this information, consumers can request a new adjuster if any problems or concerns arise.
The Louisiana Department of Insurance established the Hurricane Ida Mediation Program as an option for the commissioner to use at their discretion. However, to be activated, it required commissioner approval and limited the program on a region-by-region basis and maximum claim amounts.
“It was fantastic to see how successful this program was after Hurricane Ida,” said Stine. “We codified the program into law and updated it to include claims up to $150,000 and to take effect statewide and automatically after the governor declares an emergency declaration for a named storm event. It is voluntary for plaintiffs and defendants and could lead to quicker, non-adversarial solutions. The goal is to quickly resolve more claims amicably, avoid lengthy and costly litigation, and spread awareness of non-adversarial solutions.”
Other Storm Victims Insurance Reform that has been signed into law or resolutions includes financial incentives to attract insurance companies to Louisiana for parishes below Interstate 10, cracking down on insurance industry misleading advertising, communicating the rights of policyholders when a claim is filed after a declared disaster, preventing contractors from interpreting an insurance policy or adjusting a property insurance claim on behalf of the insured, fines in lieu of suspension or revocation of certificate of authority for insurers from out of state, minimum capital and surplus requirements for certain national insurers, and requirements that each insurer and health maintenance organization have a disaster response plan.