We recently discussed the bills passed in the 2023 Louisiana legislative session. However, some of the most notable and potentially sweeping bills were those that did not pass, namely HB 604 (which we recently discussed when it was proposed) and HB 601.
HB 604 sought to change the laws surrounding appraisal in Louisiana in an apparent attempt to eliminate conflicts of interest. But as we recently discussed when it was proposed:
In a way, the proposed law tries to prevent people from having any conflicts of interest as appraisers or judges. The pool of available and experienced appraisers and judges will be quite small by the time I read the bill. The parties will have inexperienced people trying to resolve disputed property insurance claims because the experienced will be conflict-free from participating when the current proposed law is written.
The proposed Louisiana law appears to contemplate that the only losses are real property losses because there is no provision for appointing auditors in a business interruption proceeding, mint experts as to the value of collectible coins, etc. The writer obviously has little experience with the variety of losses at issue .
The bill failed to advance out of committee and was met with opposition from both policyholder representatives and insurance companies. At this time, it is unclear if the authors will go back to the drawing board regarding attempts to change the assessment laws in Louisiana.
HB 601was the most potentially sweeping bill proposed and was very close to passage until it failed on the Senate floor. With recent legislative reforms in Florida as a backdrop, lawmakers proposed a bill that clarifies some of the various aspects of property insurance litigation.
The main points of the proposed law include the following:
- Provide definitions of “the amount of each claim payable,” “arbitrarily, capriciously, or without probable cause, “catastrophic loss,” and “disinterested;”
- Clarification that “Insurers … shall remit payment of the amount of any claim to any insured within thirty days after receipt of satisfactory evidence of loss from the insured or any other party in interest.”
- Provided that claims for punitive damages and attorneys’ fees under this section are subject to a two-year waiver period;
- Authorizes an insurer to require an insured to complete a signed proof of loss statement to support a claim for real property coverage as a condition of satisfactory proof of loss.
- Provides rules for appraisal and how payment of an appraisal premium higher than the original estimate is not evidence of bad faith;
There was a lot of back and forth in the proposal and the life of this bill, and Senator Talbot discussed some of the problems with the passage:
HB 601 clarified when a claim starts, undisputed part of a claim, defined what bad faith is and isn’t but failed on the Senate floor… We still don’t know when a claim starts, what is bad faith or what is an undisputed part of the claim. Other states have addressed these issues.
Senator Talbot suggested that the key sticking points were defining bad faith and the undisputed part of a claim. In the end, the stakeholders simply could not agree on what the law should contain. He said the Legislature would try again to pass a similar bill next session, calling the provision common sense.
Commissioner Donelon stated his belief that it was premature to attempt a similar type of tort reform as attempted in Florida.
A Louisiana business owner testified in opposition to HB 601, and her words have garnered much attention regarding how she was forced to hire an attorney to represent her in a dispute with her insurance company following the complete destruction of her business in Lake Charles following Hurricane Laura in 2020. Her words speak volumes about the importance of ensuring strong consumer protections by keeping Louisiana’s bad faith statutes intact:
I got my first hundred thousand dollars on the million deal [policy] two months after the hurricane…it took me seven months to reopen, and I was doing a hundred thousand dollars…but with a million dollar business interruption that I didn’t get a penny for, I had no choice. You have mortgage payments, you have everything, all kinds of payments you had to make. If it hadn’t been for going to a lawyer, I would have been bankrupt. The [law] the lawyers used, I needed it, and thank God he got me my money and I’m back in business again.
Look for future blog posts on the details and impact of the laws that passed and efforts in future legislative sessions to reintroduce the bills that failed.