It was a busy legislative session this year in Louisiana and for policyholders across the state still trying to recover from hurricanes that hit in 2020. Over ten insurance reform bills were introduced, and among those that passed are HB591 (referred to as ACT 345) and HB457 (referred to as ACT 402). These new laws are a massive win for policyholders. They will help hold insurance carriers accountable and prevent bad faith actions in the claims process.
HB591and HB547 were passed due to the joint effort of Mike Lindhurst (AAA), Joel Moore (NAIIA), and state Rep Gabe Firment. All parties worked tirelessly to get legislation passed that would positively affect consumers after significant disasters.
The new insurance reform bills will go into effect on August 1st of this year. Read on to learn about the changes and updates HB591 and HB547 will have on the Louisiana Insurance Code.
Insurance Reform Bill HB591 (now ACT 345)
HB591 was introduced to specify how insurance carriers can settle property damage claims. Significant wins for policyholders include:
- This law will prevent insurance carriers from using Managed Repair Programs (MRP’s). When an insurer forces the client to use a particular general contractor, it creates a conflict of interest for the consumer. It cannot be understated how much of an impact this will have on consumers and free-market contractors.
- HB591 will force carriers to explain how they arrived at the depreciated portion of the claim. Thus, in addition to creating more transparency for consumers, this law helps ensure fair payments are made.
- General contractor’s overhead and profit are now owed on claims where the use of such a contractor is reasonably foreseeable. This new law is a massive win for contractors who often have to jump through hoops to get paid fairly. Insurance carriers will also have to pay it on the ACV check.
- This new law will update insurance policy language related to the appraisal process. First, it takes away the ‘impartiality’ qualification for appraisers and makes this language mandatory for all residential policies. Second, the new law will also place time limits on how long the carrier has to name their appraiser, how long the appraisers can take to set their amount of loss, and the timeframe to submit to an umpire (30 days). This gives consumers real recourse on smaller claims and stops carriers from removing appraisal clauses from their policies.
Insurance Reform Bill HB457 (now ACT 402)
HB457 was introduced to address how claims adjusters can operate within Louisiana after the volume of complaints and issues related to Hurricane Laura and Delta in 2020. Significant wins for consumers include:
- Claims adjusters can now be held accountable for bad behavior instead of shifting responsibility back to the carrier.
- The new law will stop carrier adjusters from directing policyholders towards specific third parties like salvage yards or construction firms they might hold a financial interest in. This will help prevent the conflict of interest that arises and help ensure fair claim payout.
- HB457 will add several new provisions regarding honesty and misrepresentation. This includes not allowing carriers or their adjusters to discourage claimants from seeking counsel.
Overall, HB591 and HB457 represent some of the most comprehensive protection laws for policyholders dealing with property damage claims. We want to thank Joel Moore (NAIIA) and state Rep Gabe Firment for helping to get the insurance reform bills passed!
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