“The last legislative session was very scary at the beginning,” said Jim Donelon, Louisiana insurance commissioner, to more than 250 agents, brokers and insurers gathered at the 77th Annual Convention of the Professional Insurance Agents of Louisiana. The first in-person meeting of the group since 2019 was held at The Grand Hotel in Point Clear, Alabama, July 17-19.
Like the aftermath of Katrina, said Donelon, lawmakers had been hearing from their constituents who were more than unsatisfied with the insurance claims process after being hit with three storms during the 2020 hurricane season. Still, said Donelon, Laura, Delta and Zeta combined did not touch the record insured losses of Hurricane Katrina, which was the all-time worst insured event of any state before or since.
“There was angst, anger and upset in the southwest corner of Louisiana,” said Donelon. State Rep. Michael “Gabe” Firment, R-Pollock, an insurance claims adjuster, from the Natchitoches area, worked hard on behalf of his Lake Charles clients, said Donelon. Firment, a freshman lawmaker who wanted to make loss of utilities for more than 24 hours an insurable event “ultimately became very reasonable.”
Firment’s HB 458 passed the house without any dissenting votes, said Donelon. The bill would have mandated additional living expenses and fair rental value coverages be provided when a residence lost any essential utility, such as water, electricity, sewer or natural gas services, for more than 24 hours. The Senate Insurance Committee did not schedule the bill for a hearing.
Most locations in the Lake Charles area were without electricity for more than three weeks, said Donelon, who said restoration of power was hampered by the loss of 13 transmission poles which had to be manufactured before they could be installed.
Donelon said the disbanding of the Coalition to Insure Louisiana left a void in the lobbying effort insurers relied on. The coalition, said Donelon, was effective with legislators because it was made up of bankers, home builders and realtors who depend on a sound insurance environment to do business. Lawmakers are more receptive to their voice than to the more direct voices provided by the insurance industry, added the commissioner.
Meanwhile, said Donelon, a Lake Charles area lawmaker, Sen. Mark Abraham, a Republican, authored a bill important to the Louisiana Department of Insurance that would authorize the commissioner to have emergency rule powers during a declared emergency. Previously, said Donelon, he has relied on the governor to delegate emergency powers to him, a concept that may not have passed constitutional muster if challenged, said Donelon.
The commissioner called the legislation “90 days of breathing room” where he could prohibit cancellations and nonrenewals. Donelon said that anything longer could adversely impact the market.
Abraham’s SB 29 became Act 223 on June 14, effective Aug. 1. It allows the commissioner of insurance to issue rules affecting both health and property coverages, grace periods, involuntary cancellations and nonrenewals, limited to the time periods and geographic area in the governor’s emergency declaration. The legislature and governor maintain oversight over the commissioner’s emergency rule power; if an oversight subcommittee of lawmakers or the governor finds the commissioner’s emergency rule unacceptable, the rule shall be nullified and without effect.
Donelon commended Lou Fey, BXS Insurance and legislative advocate for PIA of Louisiana, for his efforts on behalf of insurance agents during the legislative session. “Lou Fey was invaluable,” said Donelon.
Donelon also commended Sen. Ronnie Johns, R-Lake Charles, for leading the effort to include $600,000 in the appropriations bill to fund a national market conduct program to perform examinations of insurers based on complaints and market share.
The commissioner told the agents that the department has reduced the rating assessment on insurers, but the impact of the reduced assessment on premiums paid by policyholders is far outpaced by the cost of the criminal activity of staged accidents. “Staged accidents cost insurers far more than the assessment,” said Donelon. “We pay for our loss experience.”
Diverting attention to national insurance issues and trends, Donelon noted that the National Association of Insurance Commissioners has added two new standing committees to address international and cyber insurance issues, including autonomous vehicles.
Autonomous vehicles may put a hole in agents’ books of business, since personal auto makes up the bulk of insurance premium, Donelon predicted, noting that cyber insurance will replace auto as an essential coverage. The NAIC, said Donelon, has picked up its pace to create a cyber insurance model that can be adopted by state legislatures. In 2017, said Donelon, Congress set a five year deadline for the model to be drafted.