Louisiana Department of Insurance
MONTHLY REPORT
Volume 12, Issue 1
January 2012


Members

Commissioner Jim Donelon
Theodore "Ted" Haik, Jr., Chair
Jeff Albright, Vice Chair

Raymond J. Aleman, Sr.
Lee Ann Alexander
Paul Buffone
Sheriff Greg Champagne
Representative Greg Cromer

Manuel DePascual
Nick Gautreaux
Michael Guy
Lance "Wes" Hataway
LTC John A. LeBlanc
Senator Eric LaFleur
Ann Metrailer
Robert Moorman
Senator Dan "Blade" Morrish
Chris Roy, Jr.
Stephen Schrempp
Representative Kirk Talbot
Earl Taylor
Rina Thomas


Staff


Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

Katie Walsh, Administrative Assist./Research Analyst

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LPCIC Meeting

The Louisiana Property and Casualty Insurance Commission (LPCIC) met in December with commission member Wes Hataway serving as chair for the meeting. Mr. Hataway, Director of the Office of Workers’ Compensation, Louisiana Workforce Commission gave an overview of workers’ comp, a summary of recent changes in the system, and plans for the future. Changes include the implementation of a medical treatment schedule, a crack down on fraud and the passage of a bill to receive federal matching funds for rehabilitative services by an allocation within the Second Injury Fund. The Office of Workers’ Compensation has ongoing plans to continue to improve the medical guidelines system, update the medical reimbursement schedule and reform the pharmacy reimbursement schedule.

Mr. Paul Buffone, Senior Vice President of Risk Management Service at Louisiana Workers’ Compensation Corporation (LWCC) discussed the industry side of workers’ comp and LWCC’s experience in it. He explained that nationally, there has been a trend of decreasing frequency of accidents, resulting in fewer claims. However, average claims in Louisiana tend to cost more than in most other states – for medical, 61 percent higher than the average of its neighboring states according to one study. He cautioned that an increase in frequency of claims, as occurred in 2010, coupled with the continuing increase in the cost of claims will lead to higher premiums.

Mr. Dennis Kokulak, State Relations Executive, National Council on Compensation Insurance, Inc. (NCCI) explained the role of NCCI in workers’ compensation and also gave an overview on workers’ compensation trends both statewide and nationally. NCCI is an organization that has been selected by the insurance departments of 38 states to collect and analyze workers’ compensation data from insurance companies that write workers’ comp policies in the state. The data is used as the basis for NCCI’s annual “loss cost” rate filings and employer experience “mod” factors grading their workers’ comp safety. In his presentation, Mr. Kokulak defined national and regional/state trends in terms of declining premium, profitability as measured by combined ratio, “loss cost” filings, and claim frequency and severity for both the indemnity/lost-time and medical elements. The data indicated that Louisiana ranks near the middle nationally for combined ratio and average premium rates. Regionally, Louisiana has a better or comparable claim frequency but higher claim cost for both indemnity and medical claims than neighboring states that are tracked by NCCI.

The Louisiana Property and Casualty Insurance Commission will next meet on Thursday, February 2, 2012, at 1:30 p.m. in the Plaza Hearing Room at the Department of Insurance.

NCCI Files for Workers’ Comp Rate Increase

Staff members of the LPCIC attended the National Council on Compensation Insurance, Inc. (NCCI) annual Louisiana State Advisory Forum held earlier this month. The Forum coincides with NCCI’s annual “loss cost” (rate) filing with the Department of Insurance (LDI) and provides a detailed examination of the factors underlying the rate filing as well as state and national trends.

This year NCCI filed for an overall six percent increase. This follows last year’s 4.2 percent increase after several years of decreases. LDI has the filing under review and, if approved, the “loss cost” filing will become effective on May 1, 2012 as a basis for workers’ compensation insurer rate filings.

Data provided by NCCI at the December LPCIC meeting was updated and expanded at the Forum. The presentation included a look at the state of the national economy and its impact and implications and an NCCI study on the effect obesity has on the cost of workers’ compensation claims.

Donelon Will Appeal Citizens Case to U.S. Supreme Court

The Louisiana Supreme Court will not consider an appeal for the class-action lawsuit against Louisiana Citizens Property Insurance Corp. which could cost the company $103.8 million. Insurance Commissioner Jim Donelon said Citizens will make a civil appeal to the United States Supreme Court, acknowledging that overturning the judgment may be challenging. 

The original judgment issued in March 2009 awarded $5,000 to each of the 18,573 homeowners in the class-action suit, claiming that Citizens took more than 30 days to handle claims after Hurricanes Katrina and Rita, violating state law. Since the initial $92.8 million ruling was issued, $11 million in interest has accrued. 

While Citizens does have sufficient funds to pay out the lawsuit, it could put the company at risk should a storm hit this hurricane season.

“We are pursuing an appeal at this point that we hope is successful and we’ll never have to pay this unconscionable judgment,” Donelon said.

SELA DWI Task Force

The Southeastern Louisiana DWI Task Force (SELA) met on Friday, January 13 at the Louisiana State Police Troop B in Kenner Louisiana. Mr. J.J. Williams, Traffic Safety Resource Prosecutor and former director of SELA, made a presentation to the task force, whose unique and diverse membership includes law enforcement representatives, prosecutors, members of the medical field, traffic safety organizations and the LPCIC. 

Mr. Williams reported on the Governor’s DWI Task Force and plans for SELA participation in an upcoming Louisiana District Attorneys Association conference. He noted that in 2011, alcohol related traffic fatalities have continued to decline and the number of DWI arrests has gone up.

This meeting also included brainstorming among the members on effective goals and strategies for SELA.

The members of the SELA DWI Task Force meet monthly to discuss alcohol and DWI related issues and continue to generate ideas and changes that could be made to effectively eliminate or reduce impaired driving.