Named Storm Deductible Bill Passes Louisiana House

Two bills of interest to the insurance industry are making their way through the Louisiana legislative session, which convened April 27.

House Bill 333, by Rep. Kleckley, which places limitations on named-storm, hurricane, and wind and hail homeowner insurance deductibles, passed the House of Representatives and has been sent to the Senate.

The bill as proposed “provides that any separate deductible that applies in place of any other deductible to loss or damage resulting from a named-storm or hurricane shall be applied on an annual basis to all named-storm or hurricane losses that are subject to hurricane/named storm deductibles,” according to an analysis released by the House.

The legislation “also provides that if an insured incurs named-storm or hurricane losses from more than one named storm or hurricane during a calendar year (subject to separate deductibles), the insurer may apply a deductible to the succeeding named storms or hurricanes that is equal to the remaining amount of the separate deductible or the amount of the deductible that applies to all perils other than a named storm or hurricane, whichever is greater.”

HB 333 has been amended to exempt surplus lines insurers.

The analysis published by the House explained that the Louisiana Department of Insurance believes the bill as written “could increase homeowners premiums by approximately 1.5 percent due to insurers attempting to cover risks with premium increases that are now covered by separate named storm deductibles.”

In 2007 homeowners paid approximately $1.4 billion in homeowners premiums to both standard and surplus lines property casualty insurers, according to insurance department figures.

The House analysis concluded that: “The DOI projects a premium growth factor of approximately 6 percent, which is applied to the 2007 base to project a 2010 premium base of $1.7 billion. To the extent this bill results in higher policy premiums (a 1.5 percent possible increase suggested by the DOI), premiums paid in 2010 might be some $25.5 million higher than otherwise.”

Senate Bill 290 by Sen. Quinn, which exempts surplus line insurers from provisions regarding co-insurance clauses, has been passed by committee and goes to the full Senate.

According to the Tatman Group, lobbyists for the Louisiana Surplus Lines Association, the legislation addresses a federal magistrate’s ruling several years ago that challenged surplus lines freedom of form.

Sources: The Tatman Group, Louisiana Legislature

Topics Catastrophe Legislation Windstorm Excess Surplus Louisiana Hurricane Homeowners