Temple pushes insurance industry-friendly package with hopes of lower policy premiums
25th March 2024 · 0 Comments
By Wesley Muller
Contributing Writer
(lailluminator.com) — A package of legislation to benefit insurance companies found widespread support in a Louisiana Senate committee on March 20 after only one member questioned why the state would help the industry instead of drivers and homeowners who pay extraordinarily high premiums.
The Senate Committee on Insurance approved four bills that are part of Louisiana Insurance Commissioner Tim Temple’s pro-industry agenda. Before winning election last year, Temple spent more than two decades in the insurance industry, managing and owning the kinds of companies he now regulates.
Departing from the way his predecessor, Jim Donelon, ran the Louisiana Department of Insurance, Temple has promised what he calls a “free market” approach of less regulation in the hopes of luring more insurance companies to the state. He has said more competition will lead to lower rates for consumers and end the crisis that followed five costly natural disasters over a 12-month period.
Temple’s agenda includes a number of so-called “tort reform” bills that would make it harder for policyholders and accident victims to sue insurance companies and would lower the amount of money insurers have to pay when they lose a case.
A similar package enacted in 2019 that Donelon and insurance lobbyists promised would reduce car insurance rates within a year proved to be a complete failure. Policyholders not only failed to see rates fall but actually watched them steadily increase. That was after the tort reform bills had taken away some of the best tools consumers had to take insurance companies to court.
A new tort reform effort could require Louisiana legislators to confront those broken promises or buy into them again. So far, lawmakers have shown a willingness to give them another chance.
One of the proposals is Senate Bill 323, sponsored by Sen. Kirk Talbot, R-River Ridge, who chairs his chamber’s insurance committee. It would nearly repeal the state’s “bad faith” law enacted after Hurricane Katrina when lawmakers realized insurance companies weren’t treating their customers fairly.
The bad faith law allows a homeowner to collect an additional penalty of up to 200 percent of the value of the loss if a court rules the insurance company deliberately avoided attempts to negotiate a claim and pay what it owed during a catastrophic disaster. Talbot’s bill would reduce the penalty to 50 percent.
Flanked by corporate insurance executives, Temple testified in support of the bill, saying the state’s bad faith law was the primary source of contention he heard from underwriting executives who do not currently operate in Louisiana.
Talbot’s bill was approved without objection, sending it to the Senate floor.
The committee also passed a bill that would make it easier for insurance companies to refuse to renew policies protected under the state’s three-year rule. Unique to Louisiana, the three-year rule makes it very difficult for an insurance company to drop a client if the insurer has written the client’s insurance policy for three years.
Senate Bill 370, sponsored by Sen. Adam Bass, R-Bossier City, would repeal the three-year rule, though the bill includes a grandfather clause for current policies. It would apply to any new policies written after the bill becomes law.
Another measure that sailed through committee unopposed was Senate Bill 250, sponsored by Sen. Robert Allain, R-Franklin. The legislation would prohibit lawsuits from specifically naming a defendant’s insurance company as one of the parties to the suit when the company is not actually being sued. Currently, lawsuits often name a defendant’s insurance company if the company will be covering any settlement or judgment amounts in the case.
Insurance executives told the committee the bill would not change anything regarding whether judgments are covered under insurance policies, and it took some prodding from Sen. Royce Duplessis before they acknowledged why the bill mattered to them.
Juries are often more generous with judgment amounts if they know a defendant is covered by insurance and won’t have to personally pay the judgment, according to industry observers.
“So ultimately, this bill is really designed in many ways to shape how a jury will feel about a case,” Duplessis said.
Chaz Cicero, a trial lawyer who testified against all of the legislation, said they will do nothing to lower premiums and will probably make insurance companies and lawyers even richer. He called Temple’s proposals “corporate welfare.”
When pressed, Temple would not say for certain whether his proposals would actually cause a decrease in insurance premiums. He told lawmakers he would take full blame if his agenda fails to reduce rates in Louisiana, but he would not say if he would call for repeal of the measures if they do not work.
Lawmakers have made little effort to address the failure of the 2019 tort reform agenda. Those laws are still on the books and in full effect.
This article originally published in the March 25, 2024 print edition of The Louisiana Weekly newspaper.
