Just before this year’s session of the Louisiana Legislature got under way on Monday, the state’s insurance commissioner and legislative leaders pushed for new insurance reforms that aim to reshape Louisiana’s legal climate.
Last week, Insurance Commissioner Jim Donelon, Senate Insurance Committee Chairman Kirk Talbot (R-River Bridge) and House Insurance Committee Chairman Mike Huval (R-Breaux Bridge) urged lawmakers to approve a package of bills to stabilize the property insurance market in the wake of devastating back-to-back storm seasons.
The officials called for legal reforms, including a bill to bar homeowners from signing assignment-of-benefits (AOB) contracts with third parties such as roofing companies without the approval of the insurer. Other proposals included funding a grant program for residents who want to fortify their roofs to withstand hurricanes.
Jeff Albright, chief executive officer of the Independent Insurance Agents and Brokers of Louisiana, expressed support for the AOB proposal.
“(The) proposed legislation to prohibit assignment of insurance policy benefits from policyholders to contractors, public adjusters or law firms will provide important protection for policyholders by guaranteeing that policyholders get paid the benefits of their insurance policies,” Albright told the Louisiana Record in an email.
The recent case of a Houston law firm that received a cease-and-desist order from Donelon’s office for its AOB filings illustrates the problem, he said.
“The recent scandal that has been in the news detailing how the Apex Roofing Co. and the McClenney, Moseley & Associates law firm took advantage of (Louisiana) policyholders after Hurricanes Laura, Delta, Zeta and Ida is clear evidence that assignment of benefits hurts policyholders and allows abuse by contractors and law firms,” Albright said.
Other parts of the legislative package include immunizing the property insurer of last resort in the state, Louisiana Citizens Property Insurance Corp., from bad-faith legal actions and disallowing insurers from blocking homeowners from hiring public adjusters for a second opinion on hurricane damage.
Donelon said the progress of a grant program to encourage insurers to write more policies in the state should allow the nonprofit Louisiana Citizens to shed 40,000 policies during the program’s first year and increase competition in the market. That, combined with the proposed legal reforms, will help to hold down insurance costs statewide, he said.
“Louisianans know bogus lawsuits on top of more frequent and destructive disasters means insurance companies don’t want to do business here, and if they do, they’re charging an arm and a leg,” Donelon said in a prepared statement.
