We recently discussed the bills that passed during the 2023 Louisiana legislative session. However, some of the most notable and potentially sweeping bills were ones that did not pass, namely HB 604 (that we recently discussed when it was proposed) and HB 601.
In a way, the proposed law is trying to prevent people from having any conflicts of interest as an appraiser or umpire. The pool of available and experienced appraisers and umpires is going to be pretty small as I read the bill. The parties will have inexperienced people trying to resolve disputed property insurance claims because the experienced ones will be conflicted out of participating as the current proposed law is written.
The proposed Louisiana law seems to contemplate that the only losses are those to real property because there is no provision for appointing accountants in a business interruption suit, coin experts regarding the value of collectible coins, etc. The drafter obviously has little experience regarding the variety of losses that are disputed.
The bill failed to advance out of committee and faced opposition from representatives of policyholders and insurance companies alike. Currently, it is unclear if the drafters will go back to the drawing board regarding attempts to alter the appraisal laws in Louisiana.
HB 601 was the most potentially sweeping bill proposed and was very close to passing until it failed on the Senate floor. With the recent legislative reforms in Florida as a backdrop, legislators proposed a bill clarifying some of the various aspects of property insurance litigation.
The main points of the proposed law include the following:
- Providing for definitions of “amount of any claim due,” “arbitrary, capricious, or without probable cause, “catastrophic loss,” and “disinterested;”
- Clarifying that “Insurers … shall transmit payment of the amount of any claim due to any insured within thirty days after receipt of satisfactory proof of loss from the insured or any party in interest;”
- Providing that claims for penalties and attorney fees pursuant to this Paragraph are subject to a liberative prescriptive period of two years;
- Authorizes an insurer to require an insured’s completion of a signed statement in proof of loss to support a claim for immovable property coverage as a condition of satisfactory proof of loss;
- Provides rules relative to appraisal and how payment of an appraisal award higher than the initial estimate is not evidence of bad faith;
There was a lot of back and forth in the proposal and life of this bill, and Senator Talbot discussed some of the problems with 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 fixed those problems.
Senator Talbot indicated the most significant sticking points were defining bad faith and the undisputed part of a claim. Ultimately, stakeholders just could not agree on what the law should contain. He stated the legislature would take another shot at passing a similar bill next session and calls the provision common-sense reform.
Commissioner Donelon stated his belief that it was too soon to attempt a similar type of tort reform attempted in Florida.
A Louisiana business owner testified in opposition to HB 601, and her words have gained much attention regarding how she was forced into hiring 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 as to 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-dollar business [policy] two months after the hurricane…it took me seven months to open again, and I was working on a hundred thousand dollars…but with a million dollars business interruption that I didn’t get a penny for, I had no choice. You have mortgage payments, you have everything, all kind of payments you had to pay. If it wasn’t for me going to a lawyer, I would have been bankrupt. The [law] the lawyers used, I needed that, and thank God he got me my money and I am back in business again.
Stay tuned for future blog posts regarding the specifics and effects of the laws that passed and efforts in future legislative sessions to reintroduce the bills that did not pass.