This past weekend I was asked the question above. This is what I found in Louisiana. On March 26, 2020, by Proclamation No. JBE 2020-37, Louisiana Governor John Bel Edwards transferred certain insurance matters to Commissioner of Insurance James J. Donelon. Commissioner Donelon quickly instituted reasonable emergency measures to address the growing concerns of Louisiana’s residents through Emergency Rule 40 – Moratorium on Policy Cancellations and Non-Renewals for Policyholders in Louisiana during the Outbreak of Coronavirus Disease (COVID-19) (“Rule 40”).1
Rule 40 applies to any and all kinds of insurers and insurance, including all property and casualty insurers, all life insurers, and all other insurance-related entities licensed by the commissioner or doing business in Louisiana and their insureds, policyholders, members, subscribers, enrollees, and certificate holders.2 To specifically address the question posed, Louisiana has suspended the cancellation, nonrenewal or nonreinstatement of any insurance policy in force and effect on at 12:01 a.m. on March 12, 2020, until the earlier of 11:59 p.m. on May 12, 2020, or 11:59 p.m. on the date the governor lifts the state of emergency presently in effect, inclusive of any renewal.3 Rule 40 does provide that a policyholder may cancel a policy in writing or by written consent,4 and an insurer may cancel a policy for acts or practices constituting fraud or intentional misrepresentations of material fact.5
To address the issue regarding premiums, for all but Health insurance policies, Rule 40 provides that a premium owed from an insured may be offset from any claim payment made to the insured under the insurance policy.6 Rule 40 also provides that after the state of emergency is lifted, the insurer may provide notice of cancellation or non-renewal de novo in accordance with existing statutory requirements,7 which would address the issue of non-payment of premiums.
Further, Rule 40 clarifies that nothing in Rule 40 shall be construed to exempt or excuse an insured from the obligation to pay the premium otherwise due for actual insurance coverage provided.8 And further, Rule 40 makes it clear there is no intent to delay or defer the claims adjustment process for a pending or newly filed claim: “Emergency Rule 40 shall not relieve an insured who has a claim filed before or during the pendency of Emergency Rule 40 from compliance with the insured’s obligation to provide information and cooperate in the claim adjustment process relative to the claim.”9
This initial and fast-acting approach taken in Louisiana seems to be fair and reasonable for both the insurer and the insured given the extraordinary circumstances and events. If you have questions regarding this issue in another jurisdiction, check with both your state governor’s office and/or the Department of Insurance for updated guidance. We look forward to seeing these creative solutions to this issue as we all look forward to moving through this pandemic as quickly and smoothly as possible. All the best.
1 Title 37 Insurance Part XI. Rules Chapter 40. Emergency Rule 40—Moratorium on Policy Cancellations and Non-Renewals for Policyholders in Louisiana during the Outbreak of Coronavirus Disease (COVID-19).
2 Id. at §4005. Cancellation, Nonrenewal, and Nonreinstatement, (A).
3 Id. at §4043. Effective Date.
4 Id. at §4009. Written Request for Cancellation by Insured.
5 Id. at §4005. Cancellation, Nonrenewal, and Nonreinstatement, (D).
6 Id. at §4015. Premium Offset.
7 Id. at §4005. Cancellation, Nonrenewal, and Nonreinstatement, (A).
8 Id. at §4017. Obligation of Insured to Pay Premium.
9 Id. at §4023. Insureds Obligation to Cooperate in Claim Process.