Department of Insurance Has Successful Legislative Session

Released: July 1, 2009

Commissioner of Insurance Jim Donelon announces a successful legislative session for insurance bills in the 2009 Regular Session of the Louisiana Legislature. The Department of Insurance (DOI) saw 20 out of 21 proposed insurance bills successfully pass in this session, which will bring about needed changes in the insurance industry. “I am delighted to know that nearly all of the insurance bills we requested were approved by both the House and Senate. With support from many legislators we have been able to make positive revisions to the insurance code, creating a benefit to consumers across the state,” said Commissioner Donelon.

The Single Named Storm Deductible bill, HB 333, is one such example. “We realized the need for this bill after we experienced two major hurricanes impacting nearly the same areas last year with Hurricanes Gustav and Ike,” said Donelon. This bill requires the application of a single named storm deductible when a policy includes a separate named storm, hurricane or wind & hail deductible. If multiple named storm events occur in a calendar year, the full amount of the named storm/hurricane/wind & hail deductible will be applied, only once, to the aggregate loss across all named storm events causing damage under the policy. “Now property owners will not be threatened with paying more than one hurricane deductible per season, which will give not only a financial savings, but also peace of mind,” Commissioner Donelon added.

“The Citizens Rate Making Authority bill, SB 130, should cause Citizens’ property and casualty insurance rates to stabilize in the coastal areas,” said Donelon. This legislation reforms the rate setting methodology for Citizens policies. Currently, rates are set based on the rates of the top 10 insurance writers in an area or parish. Companies writing very few policies often have the highest rates, unfairly affecting the rate making process. SB 130 rules out this negative rate impact by allowing for the inclusion of carriers to the rate making process with a market share of at least two percent. Language is also included to provide that the rates be above any company that wrote 25 additional policies in a program or parish during the previous year.

“Two bills passed bringing Louisiana into compliance with the National Association of Insurance Commissioners (NAIC) standards, which is a positive step for our state,” said Donelon. SB 318 provides changes to the Louisiana Life and Health Insurance Guaranty Association law based on a recently updated NAIC model act. The bill increases the coverage limits for annuities to $250,000 and the coverage limits for health to $500,000. SB 156 updates producer licensing and continuing education requirements. Several of the changes in the licensing process include the allowance of pre-licensing education online or self study, an increase of continuing education hours to 24 hours for all major lines of authority, abolishment of the Insurance Education Advisory Council, and allowance for the Commissioner of Insurance to require fingerprints for all new licensure applicants.

The other bills in the DOI legislative package that passed include the following:

Property and Casualty

• HB 208 – Vehicle Permissive User – Prevents motor vehicle liability insurance policies from including language which allows for limiting or dropping down policy limits available under an insured’s policy to the minimum limits required by the financial responsibility law for persons who have express or implied permission (permissive users).
• SB 290 - Surplus Lines – Provides that any policy of fire and extended coverage issued by an authorized insurer must be approved by the Commissioner of Insurance, thereby exempting unauthorized insurers, more commonly known as surplus lines insurers, from approval of co-insurance clause provisions in forms.

Health

• HB 347 - Confidentiality of Health Records – Provides that personal health information in the possession of the Department of Insurance is to be held confidential. The bill was amended during the session to allow access upon request to the Office of Inspector General and the Legislative Auditor.
• Act No. 33 - HB 370 - Medical Necessity Review Organization Fee – Allows for a one time licensure fee for Medical Necessity Review Organizations and also requires an annual report fee of $500.
• Act. No. 93 - HB 385 - Small Employer Definition – Provides for the definition of a small employer for the purposes of rate limitation provisions for health benefit plans providing coverage for small employers. In order to meet the requirements of this bill a small employer must have a bona fide employer-employee relationship, a majority of the employees must be employed within the state and the employer must not have been formed primarily for the purposes of buying health insurance.
• HB 406 - Genetic Testing – Seeks to adopt the federal requirements relative to genetic testing by prohibiting health insurers from requiring or using genetic testing and genetic information in certain circumstances.

Licensing

• Act No. 94 - HB 386 - Surplus Lines Broker Fee – Requires surplus lines brokers to renew their license every two years in lieu of the current annual requirement. This creates uniformity in the producer licensing process.
• Act No. 34 - HB 393 - Provides for fees for review of continuing education applications. The legislation codifies fees regarding CE programs that are reviewed by the Department of Insurance.
• Act No. 95 - HB 394 - Securities License Fee – Removes the minimum fee and requires one flat fee of $200.00 for the registration of securities with the Department of Insurance. The legislation also removes a formula that was no longer being utilized by the DOI.
• Act No. 99 - HB 669 - Third Party Administrator (TPA) – Removes licensed insurers from the definition of a TPA and provides them with an exemption for additional licensure and from obtaining an additional license or bond. The legislation requires that insurers acting as third party administrators must comply with all of the other provisions included in the TPA law.
• Act No. 101 - HB 704 - Provides for limited regulation of home service contract providers by the Commissioner of Insurance. The legislation requires home service contract providers to register with the Department of Insurance.

Financial Solvency

• Act No. 98 - HB 598 - Audited Financial Statements - VMB and PRVI – Requires Vehicle Mechanical Breakdown and Property Residual Value Insurers to submit audited financial statements to the Department of Insurance.

Consumer Advocacy

• SB 193 - Homeowners Policy Premium Assistance Program – During the 2008 Regular Session a program was created to allocate excess money from the Insure Louisiana Incentive Program fund to a homeowners premium assistance program. The money for the premium assistance program has been reallocated for other state funding needs. The legislation was amended to repeal the Homeowners Policy Premium Assistance Program after the money was reallocated to support other programs.

Recodification

• HB 369 - Lines of Insurance – Updates the lines of insurance definitions in the insurance code to be consistent with the filing requirements for submission of the annual statement. The references in the capital and surplus requirements have also been revised so that they are compatible with the updated definitions for the lines of insurance.
• HB 404 - Technical Recodification of the Insurance Code – Part of the recodification efforts of the Department of Insurance and includes technical changes to chapters one through three of the insurance code. The legislation removes inconsistencies, outdated provisions and corrects punctuation errors.
• SB 177 - Hearing Provisions – Updates the hearing provisions in the code to include the role of the Division of Administrative Law. This was done in order to make the Department of Insurance hearing provisions consistent with the previous transfer of authority to conduct adjudications to the Division of Administrative Law.

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