A few weeks back, I wrote about the upcoming session and how legislators write insurance bills to sway public opinion in their favor. Just this weekend the Advocate featured a headline that the homeowner’s insurance market is in crisis. I concur with their opinion, but it will take an All-Hands-on-Deck approach to repair it, not an us vs. them attitude.
Laws governing insurance in our state NEED some changes, yet Louisiana has already moved in a positive overall direction with some of our recent legislative reforms. Figuring out how to build on these in a way that benefits the people, the politicians, and the property insurers seems elusive, though. A few recently passed bills (last session) should improve our current situation and set precedent for future legislation. While they aren’t perfect, I think these two bills from last session show consensus can be reached:
ACT 345. Insurance carriers have to explain how they reached the depreciated number they offer clients on Actual Cash Value claims. They cannot use a company appointed repair contractor and must allow the insured person to use their own contractor. Furthermore, carriers will have a time limit to name an adjuster, as well as a limit on how long the adjuster has to determine the amount of loss. Finally, there exists a timeframe to submit the claim to a 3rd party to determine an agreed-upon settlement. The significance here is that carriers have to come to a reasonable value in a reasonable time frame, and allow an insured person to use who he or she would want for reasonable repairs.
ACT 402. In addition to the carrier, individual adjusters can be penalized for bad behavior. In addition, carriers and their adjusters are prohibited from discouraging claimants from seeking lawyers if insureds feel that carriers put financial interests in front of their insureds.
Both of these laws are an example of the insurance industry, politicians, lawyers, and consumers coming together to create a workable solution. They were passed after several revisions in committee, and after getting input from many stakeholders. It does not mean they are perfect solutions, but they are making things better. However, some of the proposed changes, timelines, and legalese, despite their good intentions, will likely make the trial attorneys the happiest parties of all.
The pandemic and job shortages have made claims adjusting a labyrinthine process, and the carriers are feeling the effects of drawn-out claims (and people to process them) administratively. While technology has improved data collection, much field adjusting has to done boots-on-the-ground. If you add in the skyrocketing costs and availability of construction materials, this makes setting a fair yet realistic settlement number difficult. Most importantly, we had the most catastrophic back-to-back storm systems in decades. It was a catastrophe by any Under some of the new laws, it would restrict how a company can conduct their business expeditiously, and allow attorneys to sue insurance companies even more during times of catastrophic loss.
That's not exactly making it easy to do business in our state. According to Jeff Albright, the policy lead at the Independent Insurance Agents of Louisiana (a group with which represents independent agents and their clients), “There’s just no way insurance companies can process half a million claims in 60 days”. While people like Representative Tanner McGee have every right to be frustrated with the process, their fiery rhetoric will do little to encourage carriers to work with them on solutions. Yet how do our friends in the legislature respond? Magee said insurers “should be scared”, and also said the idea that insurers can’t at least make an initial payment within 60 days of inspection is "bullshit" I wouldn’t want to deal with people who call my business practices bullshit, and carriers won’t either. That, friends, is bad for everyone!
In my next blog, I will explain how some seemingly good legislative policies can actually create consequences counter to policy owner interest. Furthermore, I will point out a few specific bills that may be representations of the law of unintended consequences. In the meantime, if you have any coverage or policy related questions, feel free to reach out to us.