July 1, 2009
Commissioner of Insurance
Jim Donelon announces a successful legislative session for insurance bills
in the 2009 Regular Session of the
Louisiana Legislature. The Department of Insurance (DOI) saw 20 out of 21
proposed insurance bills successfully pass in this session, which will bring
about needed changes in the insurance industry. “I am delighted to
know that nearly all of the insurance bills we requested were approved by
both the House and Senate. With support from many legislators we have been
able to make positive revisions to the insurance code, creating a benefit
to consumers across the state,” said Commissioner Donelon.
Named Storm Deductible bill, HB 333, is one such example. “We
realized the need for this bill after we experienced two major hurricanes
impacting nearly the same areas last year with Hurricanes Gustav and Ike,” said
Donelon. This bill requires the application of a single named storm deductible
when a policy includes a separate named storm, hurricane or wind & hail
deductible. If multiple named storm events occur in a calendar year, the
full amount of the named storm/hurricane/wind & hail deductible will
be applied, only once, to the aggregate loss across all named storm events
causing damage under the policy. “Now property owners will not be
threatened with paying more than one hurricane deductible per season, which
not only a financial savings, but also peace of mind,” Commissioner
“The Citizens Rate Making Authority bill, SB
130, should cause Citizens’ property
and casualty insurance rates to stabilize in the coastal areas,” said
Donelon. This legislation reforms the rate setting methodology for Citizens
policies. Currently, rates are set based on the rates of the top 10 insurance
writers in an area or parish. Companies writing very few policies often have
the highest rates, unfairly affecting the rate making process. SB 130 rules
out this negative rate impact by allowing for the inclusion of carriers to
the rate making process with a market share of at least two percent. Language
is also included to provide that the rates be above any company that wrote
25 additional policies in a program or parish during the previous year.
“Two bills passed bringing Louisiana into compliance with the National
Association of Insurance Commissioners (NAIC) standards, which is a positive
step for our state,” said Donelon. SB 318 provides changes to the Louisiana Life and
Health Insurance Guaranty Association law based on a recently updated NAIC
model act. The bill increases the coverage limits for annuities to
$250,000 and the coverage limits for health to $500,000. SB 156 updates
producer licensing and continuing education requirements. Several of the
changes in the licensing process include the allowance of pre-licensing
education online or self study, an increase of continuing education hours
to 24 hours for all major lines of authority, abolishment of the Insurance
Education Advisory Council, and allowance for the Commissioner of Insurance
to require fingerprints for all new licensure applicants.
The other bills in the DOI legislative package that passed include the following:
Property and Casualty
• HB 208 – Vehicle Permissive User – Prevents motor vehicle
liability insurance policies from including language which allows for limiting
or dropping down policy limits available under an insured’s policy
to the minimum limits required by the financial responsibility law for persons
who have express or implied permission (permissive users).
SB 290 - Surplus Lines – Provides that any policy of fire and extended
coverage issued by an authorized insurer must be approved by the Commissioner
of Insurance, thereby exempting unauthorized insurers, more commonly known
as surplus lines insurers, from approval of co-insurance clause provisions
• HB 347 - Confidentiality of Health Records – Provides
that personal health information in the possession of the Department of
is to be held confidential. The bill was amended during the session to allow
access upon request to the Office of Inspector General and the Legislative
Act No. 33 - HB 370 - Medical Necessity Review Organization Fee – Allows
for a one time licensure fee for Medical Necessity Review Organizations and
also requires an annual report fee of $500.
Act. No. 93 - HB 385 - Small Employer Definition – Provides for the
definition of a small employer for the purposes of rate limitation provisions
for health benefit plans providing coverage for small employers. In order
to meet the requirements of this bill a small employer must have a bona fide
employer-employee relationship, a majority of the employees must be employed
within the state and the employer must not have been formed primarily for
the purposes of buying health insurance.
HB 406 - Genetic Testing – Seeks to adopt the federal requirements
relative to genetic testing by prohibiting health insurers from requiring
or using genetic testing and genetic information in certain circumstances.
• Act No. 94 - HB 386 - Surplus Lines Broker Fee – Requires
surplus lines brokers to renew their license every two years in lieu of the
current annual requirement. This creates uniformity in the producer licensing
• Act No. 34 - HB 393 - Provides for fees for review of continuing education
applications. The legislation codifies fees regarding CE programs that are
reviewed by the Department of Insurance.
Act No. 95 - HB 394 - Securities License Fee – Removes the minimum
fee and requires one flat fee of $200.00 for the registration of securities
with the Department of Insurance. The legislation also removes a formula that was no longer being utilized by the DOI.
Act No. 99 - HB 669 - Third Party Administrator (TPA) – Removes licensed
insurers from the definition of a TPA and provides them with an exemption
for additional licensure and from obtaining an additional license or bond.
The legislation requires that insurers acting as third party administrators
must comply with all of the other provisions included in the TPA law.
• Act No. 101 - HB 704 - Provides for limited regulation of home service
contract providers by the Commissioner of Insurance. The legislation requires
service contract providers to register with the Department of Insurance.
• Act No. 98 - HB 598 - Audited Financial Statements - VMB and PRVI – Requires
Vehicle Mechanical Breakdown and Property Residual Value Insurers to submit
audited financial statements to the Department of Insurance.
• SB 193 - Homeowners Policy Premium Assistance Program – During
the 2008 Regular Session a program was created to allocate excess money from
the Insure Louisiana Incentive Program fund to a homeowners premium assistance
program. The money for the premium assistance program has been reallocated
for other state funding needs. The legislation was amended to repeal the
Homeowners Policy Premium Assistance Program after the money was reallocated
to support other programs.
• HB 369 - Lines of Insurance – Updates
the lines of insurance definitions in the insurance code to be consistent
with the filing requirements
for submission of the annual statement. The references in the capital and
surplus requirements have also been revised so that they are compatible with
the updated definitions for the lines of insurance.
HB 404 - Technical Recodification of the Insurance Code – Part of the
recodification efforts of the Department of Insurance and includes technical
changes to chapters one through three of the insurance code. The legislation
removes inconsistencies, outdated provisions and corrects punctuation errors.
SB 177 - Hearing Provisions – Updates the hearing provisions in the
code to include the role of the Division of Administrative Law. This was
done in order to make the Department of Insurance hearing provisions consistent
with the previous transfer of authority to conduct adjudications to the Division
of Administrative Law.