Recent Changes in LA Claims Payments
Louisiana Legislature Bill Increases Bad Faith Claim Payments
Further to our July 5, 2006 bulletin, please note that Senate Bill 620, amending Louisiana “bad faith” statute LSA-RS 22:658 (by increasing penalties for failure to pay a claim within 30 days from 25 per cent to 50 per cent) has been signed into law as Act 813, with an effective date of August 15, 2006. We would expect that a number of Hurricane Katrina-related lawsuits will be filed after that date, so that claimants can at least arguably take advantage of the higher penalties relative to any assertions of bad faith.
House Bill 1384, creating a regulatory scheme for the licensing and oversight of public adjusters, has been enacted as Act 806 (the Louisiana Public Adjuster Act). As we have previously reported, its requirements will take effect June 30, 2007.
We will continue to monitor Senate Bill 707 in upcoming legislative sessions (that Bill, as you will recall, would amend “bad faith” statute LSA-RS 22:1220 by broadening its scope to include all claimants, not just insureds, and to render the list of acts constituting a breach to be illustrative only, rather than exclusive). Senate Bill 707 was referred to the House Committee on Insurance, and we would expect it to be taken up again when the legislature reconvenes.
Finally, as you may be aware, Louisiana House Bill 1056 has now been signed by the Governor and enacted as Act Number 783, The Louisiana Claims Adjuster Act, setting forth a licensing and regulatory scheme for those adjusting claims on behalf of insurers. We attach a complete copy of the Act for your review.[1]
The Act defines an “adjuster” as “an individual who investigates or adjusts losses or behalf of an insurer as an independent contractor or as an employee of:
a) An adjustment bureau;
b) An association;
c) A property and casualty producer;
d) An independent contractor;
e) An insurer; or
f) A managing general agent.”
An “insurer” means “any type of insurer authorized or approved unauthorized to conduct business in this state.” The basic licensure requirements provide that “a person shall not act or hold himself out as a claims adjuster in this state unless the person is licensed as a claim adjuster in accordance with this Part.” Licenses are to be obtained from the Louisiana Department of Insurance and will be required beginning June 30, 2007 for “any person who is either employed or contracts to perform services in Louisiana as an adjuster...” The application process is detailed in the Act, but includes fingerprinting, a criminal background check, and passing a written examination, among other requirements. There are various exemptions from the examination requirement, including for those actively engaged in the business of adjusting insurance claims for at least three consecutive years in Louisiana or five total years of adjusting experience. Exemptions are also available for individuals previously licensed as claims adjusters in another state based on a claims adjuster examination.
A business entity acting as a claims adjuster must obtain a license, and must designate a licensed adjuster responsible for the business entity’s compliance with Louisiana’s insurance laws, rules and regulations.
The Act provides an exception to the licensing requirement in the event of a catastrophe or an emergency, during which no adjuster’s license is required for any individual employed or retained by an insurer and brought into the state for the purpose of investigating or adjusting losses resulting from the catastrophe or emergency. Such individuals, however, must register with the Commissioner of Insurance.
For non-residents of Louisiana, a special “non-resident claims adjuster license” may be obtained upon compliance with a number of requirements, including current licensure in another state, passage of a claims adjuster examination, and good standing in the adjuster’s home state. If the home state does not require an examination, then the individual must pass the Louisiana examination.
Claims adjuster licenses must be renewed every two years. Licensed claims adjusters are subject to LSA-RS 22:1211 et seq., relative to unfair trade practices, and LSA-RS 22:1241, et seq., relative to insurance fraud. The act also sets forth various grounds on which the Commissioner may place on probation, suspend, revoke, or refuse to issue, renew or reinstate a claims adjuster’s license, or may levy a fine. Licensed claims adjusters are subject to a continuing education requirement of a minimum of twenty-four hours of coursework, including ethics, reported on a biennial basis, in conjunction with license renewal. An exemption exists for licensees holding non-resident adjuster licenses who have met the continuing education requirements of their home state and whose home state gives reciprocity to Louisiana adjusters on the same basis. The Act also provides for required “standards of conduct” to which all adjuster shall be subject.
Should adjusters employed by your company be in need of continuing education credits in Louisiana, please note that our firm provides continuing education and training for claims adjusting professionals and is available to assist you with any such needs.
Reprint with permission from Degan, Blanchard and Nash, for a pdf version please click here
[1] We have noted an anomaly in the enactment of the Louisiana Public Adjuster Act (Act 806) and the Louisiana Claims Adjuster Act (Act 783), both co-authored by Senator Edwin Murray. Both statutes apparently have been enacted at the same place in the Louisiana Revised Statutes (Public Adjuster Act, LSA-RS 22:1210.71 – 1210.88; Claims Adjuster Act, LSA-RS 22:1210.71 – 1210.87). We have attempted to clarify this with Senator Murray’s office, and will advise once the correct statutory references are available.
