Louisiana: Senators Question Insurance Industry Response to Gustav and Ike

Louisiana Senate Insurance Committee Chair Don Cravins called a meeting Friday so Insurance Commissioner Jim Donelon and others could report on the industry response to Hurricanes Gustav and Ike.

Interim committee member Sen. Nick Gautreaux closely questioned Donelon about “named storm” deductibles and asked why those deductibles should apply if the hurricanes eventually were downgraded to tropical storms. Donelon explained that tropical storms are still “named storms” and policy language on this issue may vary from company to company. Another bone of contention for Gautreaux is his perception that take-out companies are taking only the “best” business.

Donelon indicated that he would like to look at legislation in 2009 to make the use of named storm deductibles “seasonal” in nature, so policyholders would not be subject to multiple deductibles during the same hurricane season. He also noted that he has sent an advisory letter to companies asking that they make a “liberal interpretation” of policy provisions when adjusting claims resulting from Gustav and Ike, particularly relating to payments for additional living expenses.

In addition, Gautreaux, interim member Sen. Edwin Murray and Sen. Reggie Dupre attacked the commissioner for his continued faith in the private market. “Commissioner Donelon did his best under somewhat combative circumstances to explain the value of allowing the market to work,” noted Liz Reynolds, NAMIC's Southeast state affairs manager. “He emphatically expressed his concern that overreacting to back-to-back storms by passing more restrictive legislation in 2009 could be detrimental to the long-term strategy of encouraging more companies to do business in Louisiana.”

Going back to the named storm deductibles issue, Cravins agreed that with more companies and therefore more competition, people will look for the best deductibles and that situation will serve consumers well. Donelon prepared a letter to legislators to further explain the status of named storm deductibles in Louisiana and the legislation on that issue passed during the 2008 session.

Other speakers included representatives from industry, Citizens, and additional staff members from the Department of Insurance. John Wortman, Citizens chief executive, reported on their successful handling of Gustav and Ike claims, a distinct contrast from the state-run insurer’s last catastrophe experience. Deputy Commissioner Ed O’Brien stated that despite the damage inflicted by recent storms, “good things are happening, companies are coming.”

Direct questions to NAMIC State Affairs Manager Liz Reynolds.

Posted: Tuesday, September 23, 2008 12:00:00 AM. Modified: Tuesday, September 23, 2008 1:47:43 PM.

Salary Survey: Data by Size, Region, and More

(317) 875-5250 - Indianapolis | (202) 628-1558 - Washington, D.C.

Contact NAMIC | Press | Advertise | Sponsor

We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.