| This has been a busy week for insurance and legal abuse reform at the capital, and there have been both highs and lows.
The Good: In Judiciary A (where in past sessions, legal system abuse reforms have died a painful death) some bills survived to reach a debate on the Senate floor. - HB 434 by Rep. Dewitt increases the "No Pay, No Play" penalties in Louisiana
- The bill bars a claimant from recovering the first $100,000 of recovery for bodily injury and property damage on a claim
- The current statute bars recovery for $15,000 of bodily injury and $25,000 of property damage
- This bill isn't one of the most important measures for reducing claims costs and ultimately reducing premiums, but it further disincentivizes people driving without insurance
HB 450 by Rep. Melerine eliminates the "Housely Presumption" - The bill removes the presumption, in court, that injuries were caused by an accident
- Like in the rest of the country, plaintiffs and defendants will now start off in court on a level playing field
- Plaintiffs can introduce evidence to prove the injuries WERE caused by the accident, and the defense can introduce evidence that injuries were NOT caused by the accident
HB 431 by Rep. Chenevert implements a legal system of "Modified Comparative Fault - This is one of the key bills of the session, with significant potential to reduce costs
- Essentially, the bill bars plaintiffs from recovering damages in a lawsuit if they were primarily responsible for the accident: if the court finds the plaintiff to be 51% or more at fault for the accident, they cannot recover
- Under current law, a plaintiff can recover damages, even if they are 99% responsible for causing the accident, as long as the defendant is found to have at least some fault
- An important effect if this legislation is that it could enable insurers to defend cases where they have good evidence of fault against the plaintiff, where they might settle under current law for fear of still paying significant damages despite not having a significant degree of fault
The Bad: Judiciary A also heard a bill on Medical Transparency (Collateral Source) which was significantly watered down before it was allowed to proceed to the floor. SB 231 (link is to the original bill, before committee amendments) by Sen. Reese would have provided transparency into medical costs and allowed the court to decide on a reasonable damage amount - The original bill would have allowed for evidence of both the amount billed and the amount actually paid by the plaintiff, then the judge or jury would decide what amount was reasonable for damages
- Under current law, only evidence of the billed amount is allowed to be presented to the jury making the award. After the jury makes an award, the judge can then reduce that award by up to 60% of the difference between billed and paid amount
- The amendments remove the introduction of evidence of a billed amount, and instead allow the judge to reduce the award by 70% instead of 60%
- This concept, medical transparency/collateral source, is one of the key bills of the session, with significant potential to reduce costs, however the bill in its amended form will not have a significant effect
In both the House and Senate Insurance Committees, bills with the potential do some significant damage to the system advanced. - HB 148 by Rep. Wiley allows the Commissioner of Insurance to deny rate filings that he believes are "excessive"
- You may have participated in our grass-roots push to kill HB 576 by Rep. Robby Carter. When that bill died, it was resurrected by amending the entirety of that concept into an unrelated bill: HB 148.
- Under current law, the commissioner can deny rates that are too high according to actuarial standards, including if the amount of profit the company is seeking exceeds the actuarial standard which accounts for risk amount, cost of capital, etc.
- This bill could empower the commissioner to deny filings arbitrarily on a political whim, rather than using actuarial science to justify his decision
- Politicizing the rate approval process has never been a successful, long-term strategy to build a healthy insurance market. This bill is bad public policy
- The reason behind this bill is Governor Jeff Landry. The governor is using the bill to try to shift blame for the high insurance rates to Commissioner Temple, rather than addressing the legal system abuse which is actually causing the problem
- SB 172 (the committee amendments are linked) by Sen. Allain was amended in committee to become a watered down version of HB 148, mentioned above
- This version of the bill largely fixes our practical concerns, because it defines an "excessive" rate as one that does not comply with the Actuarial Standards of Practice adopted by the American Academy of Actuaries
- The bill, as amended, will probably not cause any long-term problems
- The reason that we view this as a negative is that it is fundamentally a political diversion, planned by the trial bar and then co-signed and executed by the governor.
- SB 172 does nothing, but it distracts the public from the true cause of high auto insurance rates: legal system abuse.
- HB 356 by Rep. Braud requires all homeowners insurers to offer a stated value policy form
- Stated value policies are extremely rare because they offer very little savings in exchange for incurring significantly more risk
- Requiring all homeowners carriers to offer such a policy will increase the cost of homeowners insurance (because of increased insurer expense) without leading to meaningful benefits
- Further, these policies create negative claims outcomes and are a significant E&O risk for agents
- IIABL will continue to oppose this bill as it moves through the process
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| Auto-insurance premiums across the country could rise by almost 10 percent in 2025 due to new U.S. tariffs on imported cars and parts that swell repair costs, reports Fox Business (5/13/25, Tsai).
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| Some experts want to empower California's insurance regulator to require insurers to offer incentives to homeowners and communities that harden structures against wildfire damage, reports Urban Land Magazine (5/12/25, Miet). State Farm received the go-ahead to raise California premiums by up to 38 percent starting in June, reports ABC 7 News (5/13/25, Sierra).
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| Researchers conclude that 28 urban centers across the U.S. are subsiding, making them more vulnerable to disasters like flooding and earthquakes, reports Bloomberg (5/8/25, Court). The National Oceanic and Atmospheric Administration will shutter its public database used by insurers and others that tracks weather disasters that cause at least $1 billion in damage, reports Bloomberg (5/9/25, Rosenthal). FEMA's new acting chief warned that he will “run right over" employees who impede reforms, reports the Insurance Journal (5/12/25, Angueira).
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| The insurance crisis that has slowed real-estate sales in south Louisiana now extends to the market for beach condos on the Alabama coast, where local realtors say mortgage giant Fannie Mae is no longer underwriting some complexes over insurance and maintenance concerns, reports the New Orleans Times-Picayune (5/11/25, Riegel).
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| The committee looking at ways to reform the Federal Emergency Management Agency includes a former Louisiana official with notable hurricane-recovery experience, reports the New Orleans Times-Picayune (5/12/25, Ballard). Looming FEMA changes have some Louisiana officials worried as storm season approaches, reports WWLTV (5/13/25, Miller). Former National Weather Service leaders voiced concern over staff reductions and other cuts that they say threaten public safety, reports WWLTV (5/7/25, Cummins). Federal discussions about reducing Medicaid costs are high stakes in Louisiana, where many residents are covered by the program, reports the Times-Picayune (5/12/25, Ballard).
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| Rating agency Weiss Ratings warned this week that troubling patterns in Florida's insurance sector are now affecting Louisiana homeowners, including high rates of unpaid claims, reports IBA magazine (5/13/25, Araullo).
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| Proposals to reduce the cost of insurance and reshape other aspects of the industry moved to the Senate this week, reports the New Orleans Times-Picayune (5/11/25, Bridges). A committee advanced a plan to make insurance commissioner an appointed position, reports Louisiana Radio Network (5/14/25, Gallinaro). Senators debated why auto insurance rates are soaring, reports the Times-Picayune (5/13/25, Bridges). Lawmakers vented frustration over costs at Insurance Commissioner Tim Temple, reports the Times-Picayune (5/14/25, Bridges). More than a dozen insurance bills have moved out of House and Senate committees so far, reports The Center Square (5/14/25, McKendry). Proposals include a plan to give homeowners a tax break for hardening their roofs against storm damage, reports Fox 8 (5/12/25, Wilson).
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| Ben Albright shares a legislative update regarding 4 insurance bills you should be aware of and a bill that the Governor is using to distract consumers.
Modified Comparative Fault (HB 431) Most states are more restrictive than Louisiana when it comes to paying court verdicts to the people who are at fault for an accident. In Louisiana, currently, you can recover in court, even if you are 99% responsible for causing the accident. HB 431 would move us to a modified comparative fault system which would prevent you from recovering in court if you are majority (51% or more) at fault for the accident. This is an important step to reduce frivolous lawsuits, and IIABL supports the bill.
Medical TransparencyThere are a number of bills on this subject, but two of the key versions are HB 34 and SB 230. Generally speaking, these bills all try to bring some level of transparency to the amounts recovered in lawsuits for past medical damages (those billed or paid before trial/settlement). The various versions of these bills attack the concept in different ways. For instance, HB 34 essentially allows additional information to be presented to the jury: the billed amount, the amount actually paid, expert testimony as to what is “reasonable and customary" for the medical procedures undertaken, all of this is admissible in court and the jury can ultimately decide what the final award should be. Much of this information is currently inadmissible, for instance a defendant CANNOT currently challenge the “reasonableness" of a bill by bringing in expert testimony stating that most hospitals in the area perform the same surgery for 20% of the cost they've billed. SB 230, on the other hand, caps recovery, statutorily. It states that recovery is limited to the amount actually paid to a health care provider or else the “usual and customary" rate which is defined as a formula based off of Medicare and Medicaid rates for the procedure. We will continue to communicate as we go through session on which bills will really move the needle, but this issue needs a comprehensive solution of some kind, if we want to see commercial auto rates stabilize.
Reversionary Trusts (HB 427) In many ways this is the other side of the same medical transparency coin. Where the above medical transparency bills deal with past medical damages, this deals with future medical damages. It's important to note that this bill does not limit recovery of damages: a plaintiff can still recover all of the future damages that their future medical plan states they deserve, as determined by the court. What the bill does is allow the insurer paying the claim to place that money in a trust. The money is then freely available to pay for the injured party's medical costs. It only prohibits money that was designated specifically for future medicals to be paid for anything else. Then, if the plaintiff no longer needs the money for medical care, either because they've been restored to full health ahead of their treatment schedule or because they pass away, the money reverts back to the payor who established the trust. Given that studies have shown around 85% of future medical plans are never followed through completion, this will reduce claims costs without harming the injured person's ability to get well. IIABL supports HB 427.
Cap on General Damages (HB 435) You've probably read about “nuclear verdicts". These are court cases where the plaintiff doesn't just win a few million dollars against a standard commercial auto policy, but the award reaches astronomical levels – in some cases hundreds of millions of dollars. These amounts are not driven by special damages – that is to say quantifiable amounts like past and future medical expenses, lost wages, etc. Massive verdicts like this are usually the result of large general damages – the amount paid for unquantifiable things like pain and suffering, loss of enjoyment of life, etc. General damages verdicts are inherently subjective – how can you put a price on someone losing the ability to walk or talk, for instance? Some states have therefore put a cap on these general damages. HB 435 does just that, putting a $5 million cap on general damages. At $5 million this will not have any effect on most claims, but it could limit the possibility of some truly absurdly large verdicts. IIABL supports HB 435, though we'd prefer to see it amended to a lower cap. Mississippi for instance, has a $1 million cap on general damages.
Commissioner's Rate Approval Authority (HB 148)This is Governor Landry's attempt to shift blame for high rates to Commissioner Temple, as he has made quite clear in the press. The original version of HB 148 was harmless: it simply said that insurers have to show the expiring premium on renewal policies, so that policyholders could easily compare premiums to see any increase. However, the bill was coopted by the governor. Hopefully you participated in our grass-roots push to defeat HB 576 by Rep. Robby Carter. After that bill died, that concept was amended, almost word for word, into a completely unrelated bill: HB 148. Essentially, the revised bill allows the commissioner to deny any rate filing that he believes to be excessive. The commissioner already has the authority to deny a rate that is shown to be too high based on actuarial standards, but he has to justify his decision. This bill could allow a commissioner to deny a rate for purely political reasons, even if the rate filing is actuarially justified and denying the rate forces the company to write business at a loss. This is a significant step in the wrong direction towards making Louisiana a competitive market in which insurers want to write business. IIABL opposes HB 148.
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| A group of California homeowners has filed a lawsuit that accuses insurers of illegally coordinating to deny coverage in fire-prone areas to shut out high-risk homeowners from the private property insurance market, reports NBC News (4/23/25, Chandler).
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