Released: July 2, 2007
Insurance Commissioner Donelon is pleased with the success he has achieved with
the Blanco/Donelon Insurance Package
as well as the Department of Insurance Legislative
Package in the 2007 Regular Legislative Session. A number of insurance bills have
passed that will make Louisiana more attractive to insurers and provide insurance
protections and insurance premium relief to policyholders.
�I am very pleased with the outcome of the regular session wherein the Legislature
demonstrated remarkable interest and commitment to making a more attractive market
for insurers doing business in our state in the aftermath of the Rita/Katrina catastrophes,�
Commissioner Donelon said. �This follows on the heels of positive steps taken in
two special sessions by the Governor post Rita/Katrina that resulted in the passage
of our first ever statewide building code and re-enactment of a tax credit on all
assessments made by Citizens as a result of the two hurricanes.�
The Blanco/Donelon Insurance Package of bills that passed includes:
HB 678 - Establishes the Insure Louisiana Incentive Program. This was the
centerpiece of the Blanco/Donelon Insurance Package. It gives $100 million to qualified
insurance companies in $2 million to $10 million increments if the companies match
the state�s portion with their funds and have a minimum of $25 million in assets.
This bill includes tax credits in 2008 for policyholders whose homeowners insurance
rates went up after Katrina and Rita. It allows for a credit of seven percent of
premiums and will provide
an estimated $105 million to $110 million in credits statewide.
HB 558 - Provides for premium discounts or other adjustments for compliance
with building codes and for damage mitigation. This bill will lower insurance premiums
on properties constructed and/or modified to comply with our state's new building
code. It mandates that an insurer requesting a rate revision shall also provide
an actuarially justified discount, credit, rate differential, adjustment in deductible,
or other adjustment to reduce the insurance premium when the property owner builds
or retrofits a structure to comply with the requirements of the State Uniform Construction
Code or installs mitigation improvements or retrofits their property utilizing construction
techniques demonstrated to reduce the amount of loss from a windstorm or hurricane.
Inspection and certification requirements are established regarding compliance with
SB 204 - Provides that the phrase �two or more claims within a period of
three years,� which is an allowed reason for canceling, failing to renew or increasing
a policy deductible in an insurance policy, does not include any loss incurred or
arising from an �Act of God� incident that is due directly to forces of nature and
exclusively without human intervention. This clarifies an ambiguity in existing
law some insurers were using to non-renew homeowners policies.
SB 205 - Creates an Office of Consumer Advocacy in the Department of Insurance
and enforcement of an Insurance Consumers Bill of Rights by the Office, which includes
a list of rights and protections for Louisiana consumers. The office will provide
direct assistance and advocacy for consumers that have requested assistance from
the Department of Insurance and must be set up by October 1, 2007.
SB 153 - Provides for the depopulation of the Louisiana Citizens Property
Insurance Corporation. This allows for policies held by Citizens to be bundled in
groups of 500 and offered to insurance companies at least once a year. At least
25 percent of each bundle will be policies in the coastal parishes and 75 percent
will be homeowners policies. This bill takes effect November 1, 2007 after SB 195,
which authorizes Citizens to bid out all of its business at one time.
Bills from the Department of Insurance Package that passed include:
HB 960 - Abolishes the Louisiana Insurance Rating Commission on January 1,
2008 and turns rate-setting authority over to the Commissioner of Insurance. The
Louisiana Insurance Rating Commission approves or rejects personal lines insurance
rate increases or decreases greater than 10 percent.
HB 381- Provides that a property insurance policy may not limit the insured�s
right of action against the insurer to a period of less than two years when the
claim is a first party claim. This bill changes the period for filing action against
HB 472 - Provides relative to the recoupment of Louisiana Citizens Property
Insurance Corporation assessments and deletes its credit schedules under the FAIR
and Coastal Plans. This bill removes premium assessment subsidies, and removes excessive
and duplicative assessment charges on a policyholder. It fairly allocates Louisiana
Citizens Property Insurance Corporation�s assessments to all policyholders and allows
for pro-rata calculation based on premium over the life of the policy.
HB 481 - Provides for a flat annual $1,000 financial regulation fee per year
on all companies in lieu of an hourly rate for examinations. This bill takes effect
on July 1, 2007.
HB 499 - Provides for fees collected by the Commissioner of Insurance. It
simplifies fees and provides for an overall reduction in fees charged to insurers
HB 596 - Provides for the protection of innocent coinsureds and the effect
of misrepresentation of an insured to an insurer. This bill preserves the right
of innocent coinsureds to recover their proportionate interest under a fire policy
in the event a fire related loss is determined to have been caused by another named insured.
�With the passage of these additional reforms I can take the case to the international
market and succeed in attracting more insurance companies to the state. I appreciate
the tireless efforts of the Governor and Legislature over the past several months,�
Commissioner Donelon said.