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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
Regular Session, 2012
SENATE BILL NO. 311
BY SENATOR LAFLEUR
INSURANCE CLAIMS. To provide relative to the payment and adjustment of insurance
claims and the good faith duty and claims settlement practices. (8/1/12)
AN ACT1
To amend and reenact R.S. 22:1892(A)(3) and 1973(B)(6), relative to the payment and2
adjustment of insurance claims; to provide with respect to the good faith duty and3
claims settlement practices; to provide a definition for initiation of loss adjustment;4
to provide factors to be considered in determining the penalty to be awarded in the5
event of a certain violation; and to provide for related matters.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 22:1892(A)(3) and 1973(B)(6) are hereby amended and reenacted8
to read as follows: 9
§1892. Payment and adjustment of claims, policies other than life and health and10
accident; personal vehicle damage claims; extension of time to11
respond to claims during emergency or disaster; penalties; arson-12
related claims suspension13
A.(1) * * *14
(3) Except in the case of catastrophic loss, the insurer shall initiate loss15
adjustment of a property damage claim and of a claim for reasonable medical16
expenses within fourteen days after notification of loss by the claimant. In the case17 SB NO. 311
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.
of catastrophic loss, the insurer shall initiate loss adjustment of a property damage1
claim within thirty days after notification of loss by the claimant except that the2
commissioner may promulgate a rule for extending the time period for initiating a3
loss adjustment for damages arising from a presidentially declared emergency or4
disaster or gubernatorially declared emergency or disaster up to an additional thirty5
days. Thereafter, only one additional extension of the period of time for initiating6
a loss adjustment may be allowed and must be approved by the Senate Committee7
on Insurance and the House Committee on Insurance, voting separately. Failure to8
comply with the provisions of this Paragraph when the failure has been arbitrary,9
capricious, or without probable cause shall may subject the insurer to the penalties10
provided in R.S. 22:1973. For the purposes of this Paragraph, initiation of loss11
adjustment includes but is not limited to any of the following conduct:12
(a) A reasonable attempt by the insurer to contact the claimant to set an13
appointment to discuss the claim or to conduct an inspection of the property.14
(b) An oral, written, or electronic communication sent by the insurer to15
the claimant outlining the claims process.16
(c) An advance of funds by the insurer to the claimant that is17
accompanied by an oral, written, or electronic communication that includes an18
explanation of the claims process.19
(d) A reasonable attempt to begin the investigation of the claim,20
including but not limited to a reasonable attempt to contact witnesses, to inspect21
any property or accident scenes related to the claim, or to determine the value22
of the claim.23
* * *24
§1973. Good faith duty; claims settlement practices; cause of action; penalties25
* * *26
B. Any one of the following acts, if knowingly committed or performed by27
an insurer, constitutes a breach of the insurer's duties imposed in Subsection A of28
this Section:29 SB NO. 311
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words in boldface type and underscored are additions.
* * *1
(6) Failing to initiate loss adjustment of a claim pursuant to R.S. 22:18922
or to pay claims pursuant to R.S. 22:1893 when such failure is arbitrary, capricious,3
or without probable cause. Factors to be considered in determining the amount4
of a penalty to be awarded, if any, pursuant to Subsection C of this Section5
include but are not limited to whether the insured sustained any actual6
damages, the reasonableness of the insurer's conduct in light of all the7
circumstances related to the claim, and whether there were extenuating8
circumstances that affected the insurer's ability to pay the claim or initiate the9
loss adjustment.10
* * *11
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
Present law requires payment of any claim due any insured within 30 days after receipt of
satisfactory proofs of loss from the insured or any party in interest. Further requires all
insurers to pay the amount of any third party property damage claim and of any reasonable
medical expenses claim due any bona fide third party claimant within 30 days after written
agreement of settlement of the claim from any third party claimant.
Present law provides that except in the case of catastrophic loss, the insurer shall initiate loss
adjustment of a property damage claim and of a claim for reasonable medical expenses
within 14 days after notification of loss by the claimant. Further provides that in the case
of catastrophic loss, the insurer shall initiate loss adjustment of a property damage claim
within 30 days after notification of loss by the claimant except that the commissioner may
promulgate a rule for extending the time period for initiating a loss adjustment. Failure to
comply with present law shall subject the insurer to penalties provided in present law.
Proposed law retains present law and adds that failure to comply with present law when the
failure has been arbitrary, capricious, or without probable cause may subject the insurer to
the penalties provided in present law. Further provides that initiation of loss adjustment
includes but is not limited to any of the following:
(1)A reasonable attempt by the insurer to contact the claimant to set an appointment to
discuss the claim or to conduct an inspection of the property.
(2)An oral, written, or electronic communication sent by the insurer to the claimant
outlining the claims process.
(3)An advance of funds by the insurer to the claimant that is accompanied by an oral,
written, or electronic communication that includes an explanation of the claims
process.
(4)A reasonable attempt to begin the investigation of the claim, including but not SB NO. 311
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words in boldface type and underscored are additions.
limited to a reasonable attempt to contact witnesses, to inspect any property or
accident scenes related to the claim, or to determine the value of the claim.
Present law provides that an insurer owes to his insured a duty of good faith and fair dealing
which includes an affirmative duty to adjust claims fairly and promptly and to make a
reasonable effort to settle claims. Further specifies certain acts that constitute a breach of
the insurer's duties to the insured.
Proposed law retains present law and adds factors to be considered in determining the
amount of a penalty to be awarded, if any, pursuant to present law including whether the
insured sustained any actual damages, the reasonableness of the insurer's conduct in light of
all the circumstances related to the claim, and whether there were extenuating circumstances
that affected the insurer's ability to pay the claim or initiate loss adjustment.
Effective August 1, 2012.
(Amends R.S. 22:1892(A)(3) and 1973(B)(6))