HB 601 in the spotlight this legislative session

Lake Charles, LA (KPLC) - Most people here agree reform is needed concerning property insurance in Louisiana. But is it the companies or the homeowners who need to change their ways? One controversial reform bill had what insurance companies wanted until it went to the State Senate Monday and was amended. Then it had what consumer advocates wanted.

Now the author has pulled it, so it appears dead for this session.

Steamboat Bill’s owner, Kathi Vidrine went before the insurance committee this session to explain why she had to hire a lawyer after Hurricane Laura.

“I had no choice. You have mortgage payments; you have all kinds of payments that you have to pay. If it wasn’t for me going to a lawyer, I would have been bankrupt,” Vidrine said.

Yet the insurance industry has been seeking reforms it wants. They say they want to clarify the obligations of both insurance companies and policyholders so everyone knows what they are supposed to do after a disaster.

Officials with the Louisiana Association of Business and Industry say critically needed legislation was gutted Monday.

LABI General Counsel Lauren Hadden said HB 601 would have improved and stabilized the insurance market.

“Our goal here is to lessen litigation, streamline the process for both the policyholder and the insurers, everybody understands their rights and duties and obligations, and to try to create a market that encourages insurers to come back to the state of Louisiana. With so few insurers in the market, you’re kind of left with whatever’s there,” Hadden said.

But a group that advocates for policyholders, Real Reform, said HB 601, before it was amended, would have been disastrous for consumers.

Ben Riggs calls it an anti-consumer bill.

“The process that they were looking to implement with HB 601 would have been a much more protracted process that took longer for storm victims to get their claims paid so they could rebuild their lives. Finally, I think there was a shield put in place to protect insurers who act in bad faith,” Riggs said.

He said consumers pay premiums on time and deserve claims to be timely paid. Riggs also said SWLA lawmakers Senator Mark Abraham and Senator Jeremy Stine advocated for policy holders here.

Here is HB 601 and how it evolved over the session.

LABI issued the following statement after the bill left senate Monday.

LABI Statement on Senate Decision to Amend Critical Insurance Legislation

Baton Rouge, LA – The Louisiana Association of Business and Industry (LABI) released the following statement after the Louisiana Senate chose to reject several imperative changes to the bad faith statute for property insurance. HB 601 by Representative Mike Huval made critical clarifications for both policyholders and insurers as to their obligations to ensure a swift resolution of the claims process. Senator Bret Allain amended the bill on the Senate Floor, removing critical amendments that were adopted in Senate Insurance. These detrimental amendments removed the clarity provided by defining key terms and obligations—importantly, the definition of what constitutes satisfactory proof of loss. The amendment passed on a 25-13 vote, prompting Senator Kirk Talbot, who was handling the bill, to return the bill to the calendar.

“We are disappointed in today’s Senate vote on an imperative first step to improving and stabilizing the insurance market throughout the state,” said LABI’s General Counsel Lauren Hadden. “The amendments voted on today effectively gutted much-needed guidance clarifying each party’s obligations in the claims process, and in fact further muddled the duties and obligations imposed on each party, thereby inevitably leading to more litigation. In voting for the amendment, 25 senators left businesses and policyholders constrained by an insurance market that is unaffordable and limited in availability.”

“We commend Representative Huval, Senator Talbot and their staff for their hard work and perseverance throughout the legislative process,” Hadden continued. “They worked tirelessly to prepare a bill that provided clarity to both the policyholder and the insurer and, in turn, improve the stability and affordability of the property insurance market. Our work will continue as we seek solutions that consider the interests of the businesses and families forced to carry the weight of these burdens.”

Real Reform issued this statement about HB 601 before it was amended Monday.

HB 601 by Rep. Huval will be before the House Insurance Committee Tuesday, May 2nd. HB 601 would be disastrous for Louisiana policyholders. This anti-consumer bill shields bad-faith insurers from consequences, creates numerous opportunities to delay claims, and encourages insurance companies to lowball families and small businesses. It hurts Louisiana by helping big insurance companies cheat homeowners and small businesses. Big insurance companies frequently slash estimates and deliberately delay claims. Current Louisiana law provides consumers with recourse when their insurer acts in bad faith. HB 601 shields insurance companies from liability, even if the initial damages are a small fraction of the final appraisal award. This makes it harder for storm victims to get their claims paid promptly and start rebuilding their lives. “Louisiana families and small businesses are still struggling to get back on their feet after three catastrophic hurricanes,” said Ben Riggs, executive director of Real Reform Louisiana. “We cannot afford more industry-friendly legislation that stacks the deck in favor of big insurance at the expense of consumers. Louisiana needs real insurance reform that increases competition, lowers costs, and helps hold bad actors accountable.”

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