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MONTHLY REPORT
Volume 13, Issue 11
November 2013


Members

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

Ray Aleman, Jr.
Lee Ann Alexander
J.E. Brignac, Jr.
Paul Buffone
Stephen F. Campbell
Sheriff Greg Champagne
Representative Greg Cromer

Louis G. Fey, Jr.
Michael Guy
Chris Haik
Lance "Wes" Hataway
Ron Henderson
Senator Ronnie Johns
Scott Landry
LTC John A. LeBlanc
Robert Moorman
Senator Dan "Blade" Morrish
Frank Opelka
Representative Kirk Talbot
Earl Taylor


Staff


Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

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devans@ldi.la.gov

Donelon Names New P&C Deputy Commissioner

Earlier this month Commissioner Donelon appointed Warren Byrd to serve as the Deputy Commissioner of the Office of Property and Casualty within the Department of Insurance to replace Ed O’Brien, who retired in late October. Mr. Byrd joined the Department in 2004 and has served as Executive Counsel since 2006. Deputy General Counsel Arlene Knighten is the new Executive Counsel.

The Commissioner cited Mr. Byrd’s varied insurance and legal experience as making him an ideal choice to accomplish the long-term goals and manage the daily operations of the Office of Property and Casualty. “We have come a long way in the property and casualty market over the last seven years but it is critical for us to keep the momentum moving forward. Warren is the right leader at the right time to help us achieve that. [He] is the consummate professional and I know his experience will be a real benefit to consumers and insurers alike in the Office of Property and Casualty,” said the Commissioner.

The Office of Property and Casualty is responsible for the regulation of all commercial and personal lines of property and casualty insurance in the state, including homeowners, auto, and workers’ compensation.


News Briefs

NCCI Files for Workers’ Comp Loss Costs Decrease

The Louisiana Department of Insurance (LDI) has received a filing from the National Council on Compensation Insurance, Inc. (NCCI) for an overall 5.1 percent decrease in Louisiana’s workers’ compensation loss costs. Insurance companies base their rates on loss cost filings. This proposed decrease follows three years of increases in loss costs and has been attributed to a decline in the number of workplace injuries and a reduction in the average cost per claim in the state. NCCI detailed Louisiana-specific and national information at a forum in Baton Rouge on November 21.

Louisiana Workforce Commission executive director Curt Eysink was quoted as saying, “Louisiana’s employers are to be commended for making workplace safety a priority. The implementation of medical treatment guidelines in 2011 has improved and hastened treatment injured workers receive, while saving employers millions of dollars in court costs and legal fees.”

The NCCI filing is currently under review by the LDI and will be effective May 1, 2014, if approved.

Update on NFIP Rate Increase

The “Monthly Report” continues to follow developments in efforts to delay or amend the dramatic rate increases for non-repetitive-loss primary residences insured through the National Flood Insurance Program (NFIP) that began to be implemented October 1.

The lawsuit filed by Mississippi’s insurance commissioner in late September has received the support of Florida, Alabama, Massachusetts, South Carolina and Louisiana in November with their filing of amicus briefs in federal court. The Federal Emergency Management Agency (FEMA), which administers the NFIP and was named a defendant in Mississippi’s suit, has replied in a brief that asserts Mississippi lacks standing to sue and has not demonstrated “imminent, irreparable injury.” FEMA asks that the suit be dismissed.

The “Homeowner Flood Insurance Affordability Act of 2013,” which was filed in both houses of Congress in late October, continues to enlist co-sponsors from both sides of the aisle. The bill would effectively delay rate implementation until an affordability study is completed. An attempt in the Senate to attach the bill to one authorizing defense spending has proven unsuccessful so far.

On November 20, Commissioner Donelon met with President Obama and other insurance commissioners on the Affordable Care Act and presented the President with a letter authored by Greater New Orleans, Inc. that emphasizes the local impact of the NFIP rate hikes and asks that they be delayed. State senators Morrish and Johns and representative Cromer attended a November 21-24 meeting of the National Conference of Insurance Legislators (NCOIL) at which they hoped to secure a resolution from NCOIL supporting passage of the Homeowner Flood Insurance Affordability bill before Congress.

LA Citizens Board Meeting – Residual Property Market Improving

The Board of Directors of Louisiana Citizens Property Insurance Corporation (Citizens) met on November 14 to positive news on several fronts. Although in recent months Citizens has carried a negative balance on its books from the ongoing settlement of 2005 Katrina and Rita class-action lawsuits, 2012 Hurricane Isaac, and February 2013 hail storm claims, by early 2014 it should have a positive balance. Citizens continues to have adequate cash on hand to handle routine operations and claims. The Board approved a 2014 budget that reflects about $2 million in savings from the nearly completed process of bringing underwriting and claims handling in-house.

In addition, the Board approved an overall average 3.96 percent decrease in premium rates for its commercial policyholders that will be implemented in February – a welcome turn from last year’s overall average 45.1 percent increase.

Also, it appears that the current round of depopulation will result in about 13,000 policies being assumed by voluntary market insurers, which could reduce Citizens’ policy count to approximately 89,000 by 2014.

LHSC Briefing on LA 2012 Crash Data and
2013 Seatbelt Use

The Louisiana Highway Safety Commission sponsored a November 7 briefing on the 2012 Louisiana Traffic Crash Data Report and 2013 seatbelt observational and attitudinal surveys. Dr. Helmut Schneider, Chairman of the Information Systems and Decision Sciences Department and Director of the Highway Safety Research Group at LSU, presented the mixed results.

Following a steady four-year decline in fatal crashes and the number of resulting fatalities, Louisiana experienced increases in both in 2012. Fatal crashes, which declined from 900 in 2007 to 629 in 2011, rose 3.5% to 652 in 2012. Tragically, fatalities, which had decreased from 993 in 2007 to 676 in 2011, increased 6.6% to 722 lives lost in 2012.

Dr. Schneider reported the good news that driver fatalities decreased by 2.4% from 467 to 457 in 2012. However, he recognized as bad news that pedestrian fatalities rose from 93 to 121 (30.1%) and bicycle fatalities increased from 16 to 24 (50%). While there was improvement in 2012, the primary behavioral factors in driver fatality crashes remain one or more of three: lack of seatbelt use (51%), aggressive driving (49%) and alcohol (38%).

The truly bright spot was that seatbelt use by all front-seat occupants in Louisiana increased in 2013 as reflected in an observational survey. After hovering at or near 75% for a number of years, usage edged up to 78% in 2011, 79% in 2012 and now 82% in 2013.

A survey of attitudes to seatbelt usage revealed that while 69% of back seat passengers say they always buckle up, 20% did not know that state law requires it. Asked which would reduce fatalities, respondents rated stopping drunk driving (36%) and texting (30%) highest with obeying the speed limit and wearing seatbelts the lowest (3%).

LPCIC Meeting

The Louisiana Property & Casualty Insurance Commission will meet on
Thursday, December 5 at 1:30 p.m. at the Department of Insurance, Plaza Hearing Room to address the causes and concerns of the high auto insurance rates in Louisiana.

Have a safe and happy Thanksgiving
from the members and staff of the
Louisiana Property & Casualty Insurance Commission.

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