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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 not to exceed sixty days. for damages arising from a presidentially4
declared emergency or disaster or gubernatorially declared emergency or disaster up5
to an additional thirty days. Thereafter, only one additional extension of the period6
of time for initiating a loss adjustment may be allowed and must be approved by the7
Senate Committee on Insurance and the House Committee on Insurance, voting8
separately. Failure to comply with the provisions of this Paragraph shall subject the9
insurer to the penalties provided in R.S. 22:1973. For the purposes of this10
Paragraph, initiation of loss adjustment shall be satisfied if the insurer11
establishes one of the following:12
(a) The insurer has unconditionally tendered all undisputed amounts13
owed.14
(b) The insurer has met with the insured.15
(c) The insurer has proof that an inspection of the property has taken16
place within the time periods established in this Paragraph.17
The provisions of this Paragraph shall become effective August 1, 2012.18
* * *19
§1973. Good faith duty; claims settlement practices; cause of action; penalties20
* * *21
B. Any one of the following acts, if knowingly committed or performed by22
an insurer, constitutes a breach of the insurer's duties imposed in Subsection A of23
this Section:24
* * *25
(6) Failing to initiate loss adjustment of a claim pursuant to R.S. 22:189226
or to pay claims pursuant to R.S. 22:1893 when such failure is arbitrary, capricious,27
or without probable cause. Factors to be considered in determining the amount28
of a penalty to be awarded, if any, pursuant to Subsection C of this Section29 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.
include but are not limited to whether the insured sustained any actual1
damages, the reasonableness of the insurer's conduct in light of all the2
circumstances related to the claim, and whether there were extenuating3
circumstances that affected the insurer's ability to pay the claim or initiate the4
loss adjustment.5
* * *6
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Cheryl Horne.
DIGEST
LaFleur (SB 311)
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 permits the commissioner to promulgate a rule for extending the time period
for initiating a loss adjustment not to exceed 60 days. Removes the ability of the
commissioner to promulgate a rule for extending the time period for initiating a loss
adjustment for damages arising from a presidentially declared emergency or disaster or
gubernatorially declared emergency or disaster up to an additional 30 days. Further removes
the provision for only one additional extension of the period of time for initiating a loss
adjustment that must be approved by the Senate Committee on Insurance and the House
Committee on Insurance, voting separately.
Proposed law provides that initiation of loss adjustment shall be satisfied if the insurer
establishes one of the following:
1. The insurer has unconditionally tendered all undisputed amounts owed.
2. The insurer has met with the insured.
3. The insurer has proof that an inspection of the property has taken place within the
established time periods.
Proposed law provides for an effective date of August 1, 2012.
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. 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.
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))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill.
1. Permits the commissioner to promulgate a rule for extending the time period
for initiating a loss adjustment not to exceed 60 days.
2. Removes the ability of the commissioner to promulgate a rule for extending
the time period for initiating a loss adjustment for damages arising from a
presidentially declared emergency or disaster or gubernatorially declared
emergency or disaster up to an additional 30 days. Further removes the
provision for only one additional extension of the period of time for initiating
a loss adjustment that must be approved by the Senate Committee on
Insurance and the House Committee on Insurance, voting separately.
3. Removes the reference to the failure to comply with the time extensions
when the failure has been arbitrary, capricious, or without probable cause.
4. Provides that initiation of loss adjustment shall be satisfied if the insurer
establishes one of the following:
(a)The insurer has unconditionally tendered all undisputed amounts
owed.
(b)The insurer has met with the insured.
(c)The insurer has proof that an inspection of the property has taken
place within the established time periods.
5. Requires the provisions of proposed law to be effective August 1, 2012.