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Louisiana Property and Casualty Insurance Commission:
New Regulatory Reforms Aim to Improve Environment
Released: October 12, 2007 There has been considerable discussion in the national press about the new insurance environment being created by the legislation adopted in Louisiana and in our sister coastal states following the catastrophic hurricanes of 2005. While we are finally seeing signs of a better insurance climate in Louisiana, we continue to receive unwarranted and undeserved criticism from some in the insurance industry, despite the pro active approach taken by state officials to reform our insurance market, according to Ted Haik, chairman of the Louisiana Property and Casualty Insurance Commission. The Commission, whose 22-member board is composed of national and state trade associations, as well as insurance regulators, legislators, state officials and consumer representatives, is seeing a brighter outlook for the insurance marketplace in Louisiana, said Haik. In the last decade, Louisiana legislators have approved numerous reform measures aimed at strengthening our homeowners and commercial property markets. Louisiana was among those coastal states that experienced a drastic reduction in the voluntary insurance market following Hurricane Andrew in 1992. In trying to balance the needs of Louisiana’s citizens with the concerns and reticence of insurers, laws were enacted that revamped the system for financing our state’s residual market plans for property insurance, provided a “file and use” system for rate increases or decreases averaging ten percent or less, and instituted commercial deregulation as a modified “use and file” system. In December 2005, Louisiana enacted its first statewide building code, one of the country’s most stringent. HB 704 (Act 335), passed in the 2007 Regular Session, maintains the Louisiana State Uniform Construction Code, the statewide building code, and provides resources for training and enforcement. The highlights of the code are: • It applies to all new construction and major renovations greater
than 50 percent. The Legislature followed up this year with the January 1, 2008 abolition of the Louisiana Insurance Rating Commission, the panel of political appointees who regulate insurance rates. The Rating Commission is the most frequently cited impediment by insurers to establishing competitive rates. It has also discouraged many insurers from entering the Louisiana market. Scrapping the Rating Commission will go down as one of the most positive insurance regulatory reforms in Louisiana in recent history. To further boost market development in Louisiana, the Legislature enacted the Insure Louisiana Incentive Program. It provides $100 million in funding for capital matching grants to insurers writing new property insurance in the state. The public invitation requesting applications for participation in the program was issued October 2, 2007, and will remain open until November 1, 2007. In the wake of hurricanes Katrina and Rita, our policyholders were troubled by problems with adjusters, followed by skyrocketing rates and shrinking availability of coverage. “In this political caldron, I think our Legislature showed restraint,” said Haik. The Louisiana Property and Casualty Insurance Commission was created 10 years ago by the Legislature, and its role was expanded in 2001 from auto insurance to include homeowners and workers’ compensation. The charge of the Commission is “to review and examine the availability and affordability of property and casualty insurance in the state” culminating in an annual report of its studies and legislative recommendations to the governor, Legislature, and commissioner of insurance. The Commission members have brought diverse views to bear on a number of topics and the effort has remained cooperative, constructive, and effective for the Louisiana market. Many of the Commission’s recommendations have paralleled laws ultimately enacted by our Legislature. The result has been to create a statutory environment in which responsible, solvent insurers should increasingly be able to provide products equitably priced through market-based competition. LPCIC Board Members: Ted M. Haik, Jr., Chairman Richard Clements, Vice-Chairman Haik, Minvielle and Grubbs Law Firm Clements Insurance Services, LLC James J. Donelon Commissioner of Insurance Jeff Albright Christine T. Berry, Ph.D. Lorrie K. Brouse Col. James Champagne Joseph E. Deutsch, CPCU Representative Rick
Farrar Nicholas Gachassin Steve Hymel F. Charles “Chuck” McMains Tom O’Neal Senator Julie Quinn Kimberly
L. Robinson Richard L. Stalder Earl B. Taylor Aubrey T. Temple, Jr. Karen Winfrey |
