Department of Insurance Has Successful Legislative Session

July 21, 2010

Commissioner of Insurance Jim Donelon announces a successful legislative session for insurance bills in the 2010 Regular Session of the Louisiana Legislature, with a large number of bills in the Louisiana Department of Insurance (LDI) packet passing. “I am delighted to know that the majority of the insurance bills we requested were approved,” said Commissioner Donelon. “Although the Legislature was faced with a historic budget deficit and huge oil catastrophe bearing down on the Louisiana coast, legislators supported LDI, allowing us to make some positive changes to insurance laws in Louisiana, a benefit for consumers and the insurance marketplace.”

One important change is Act 595 (SB 268) regarding the Louisiana Insurance Guaranty Association. This act is based on the National Association of Insurance Commissioners model act and increased the maximum amount paid on covered claims from $300,000 to $500,000 per accident or occurrence other than workers compensation and unearned premiums. “This is a plus for those involved in claims against failed insurers since a higher maximum payment per claim is now provided,” said Commissioner Donelon. The act also limits the assessment to member insurers to a maximum of one percent of net direct written premiums for the preceding calendar year. It allows the state insurance guaranty association to work with other states’ guaranty associations to resolve claims in the event of a multi-state solvency. It also adds a consumer representative to the board of directors.

Act 912 (HB 244) extends health insurance coverage options to the age of 26 for dependent health insurance coverage of dependent children or grandchildren under their parent’s or grandparent’s health insurance policy. Currently, dependent children are allowed coverage to the age of 21 unless they are full-time students and unmarried, in which case they are covered up to age 24. The act deletes the requirement that they be unmarried or full-time students. It sets certain requirements and restrictions for health insurance issuers and health maintenance organizations and also exempts the Office of Group Benefits. This act becomes effective September 23, 2010, and the enrollment period ends 30 days later.

Act 397 (HB 952) revises the Louisiana Citizens Property Insurance Corporation’s (Citizens) Depopulation Program. This program is required to make at least one round of take-out offers each year. Previously, Citizens was required to offer policies in groups or bundles of at least 500 through the Depopulation Program. Now Citizens may offer all of its policies at one time to private insurance companies. It does not set a minimum or maximum limit. “Now, Citizens will be able to open its whole book of business to interested insurance companies for take-out opportunities. This gives more efficiency and flexibility in the program, as well as more opportunities for decreasing the number of policies Citizens holds,” said Commissioner Donelon. Several other positive, technical changes were made in this Act.

Since Hurricanes Katrina and Rita, Citizens has held three depopulation offerings and succeeded in reducing their total policies by 43,000 with 15 companies participating in the three offerings. Citizens now has 127,000 policies, which is close to the number held before Hurricanes Katrina and Rita, and continues on the downward trend.

A complete list of LDI insurance legislation from the 2010 Louisiana Regular Legislative Session may be found at the LDI website at www.ldi.la.gov by clicking on “2010 LDI Legislation” under the new information banner.

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