Insurance policies can’t be canceled for non-payment until May 2

By Christopher Tidmore
Contributing Writer

There is no greater fear during a period of economic anxiety than to have one’s insurance canceled for non-payment, when just a few more weeks grace period to write the check would keep everything in place. Or to find that the coverages of the policy – just barely – would not cover the risk endured.

Louisiana Insurance Commissioner Jim Donelon issued three rules over the last week to deal with these specific fears. Emergency Rules 39, 40, and 41 are geared to help keep policy’s relevant, prevent quick cancelations, and allow flexibility in medical coverages for those who gain the coronavirus. They do not cover every instance, as a representative for the La. Insurance Department admitted in an interview with The Louisiana Weekly, but they do provide many protections previously unavailable.

“The purpose of Emergency Rule 39 is to provide for the procedure whereby insureds who operate commercial enterprises in Louisiana can make demand upon their admitted insurers to allow for either a mid-term self-audit by the insured or a physical audit by the insurer of those insurance policies that are auditable in order to appropriately and immediately adjust the premium for the risks that have negatively affected the ability of commercial enterprises to operate in the normal course of their business. Additionally, Emergency Rule 39 sets forth the procedures that will control the actions of those admitted insurers who have provided commercial insurance coverage to those commercial insureds whose insurance policies are rated using an auditable exposure basis, including but not limited to, payroll, sales, enrollment, attendance, occupancy rates, square footage or any other basis.”

Rule 39 does not mean that insurance policies can be rewritten in the middle of a policy term to provide more coverages, the department admits, but the interpretation of the existing provisions are given maximum consideration. It’s a bit arcane to the layman, in a way that Rule 40 is not. Put simply, if you cannot pay right now for most insurance policies Emergency Rule 40 prevents cancelation for almost 60 days.

Louisiana Deputy Insurance Commissioner Frank Opelka outlined, “The purpose of Emergency Rule 40 is to impose a moratorium on policy cancellations and non-renewals for policyholders in Louisiana during the outbreak of the coronavirus disease (COVID-19). Emergency Rule 40 is effective during the period of time from March 12 through May 12. Cancellations for fraud and material misrepresentations or upon written request by the consumer continue to be permitted during this period. Insureds remain obligated to pay all premiums. Emergency Rule 40 does not apply to new policies issued after the effective date therein.”

Department spokesman John Tobler noted in an interview with The Louisiana Weekly, that the rule does not mean that clients are relieved of the responsibility of paying their insurance premiums. When asked if an underwriter cannot issue a cancellation for an admitted company here in Louisiana, is there anything stopping the client from refusing to pay until the end of the 60 day period, even if his/her outstanding premiums are in arrears, he replied, “No, but the outstanding premium would remain owed and due to the insurer within 10 days of the final date of the moratorium.” Payments will be due by May 2.

Moreover, this only covers “admitted” companies in Louisiana. Many insurance policies are written by out-of-state firms not under the regulatory authority of the La. Commissioner. When queried if under Rule 40, should a commercial client have a maritime policy written out of a London syndicate or similar out-of-state underwriter, Tobler noted, “The LDI does not regulate maritime policies. Further, we do not regulate the relationship between the agent and the non-admitted carrier beyond market conduct & ethical issues.” There is not much the La. Department of Insurance can do, in other words.

However, for many insurance agents in Louisiana, the department spokesman did tell this newspaper that they would not be responsible for the premiums.

Commissioner Donelon issued Emergency Rule 41 to make sure that health insurance policies that strictly cover hospitalization, still provide medical coverages if the patient must go to another facility. “Louisiana’s hospitals are on the front line of the fight against the COVID-19, and this order requires insurers to cover post-transfer stays in step-down facilities,” said Donelon. “These existing private health care facilities are being prepared to receive patients from acute care hospitals and increase the availability of beds for COVID-19 patients.”

“This rule will ensure that these transfers can occur smoothly and without disrupting facility reimbursement. Patients will pay the same cost-sharing amount in the step-down facility that they would have paid had they remained in the acute care hospital.” Moreover, Emergency Rule 41 provides limited waiver for parishes or municipalities whose acute care hospitals daily inpatient bed occupancy exceeds eighty-five percent (85%). That includes Orleans and Jefferson parishes.

In a blow to many families that wish to treat their loved ones at home, though, Tobler told The Louisiana Weekly that “step down” facilities do not include medical equipment and services for home care, if hospital beds are unavailable. “No, Emergency Rule 41 applies only to inpatient transfers. The facilities receiving such transfers are being arranged by the Louisiana Department of Health.” Such authority is beyond the power of the La. Insurance Commissioner to mandate, unless the insurance policy language allows.

This article originally published in the April 6, 2020 print edition of The Louisiana Weekly newspaper.