DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 577 Reengrossed 2021 Regular Session McKnight
Abstract: Provides relative to residential flood coverage.
Proposed law defines the terms "flood", "hurricane", "named storm", residential flood coverage",
"separate named storm or hurricane deductible", and "standard flood deductible".
Proposed law provides that proposed law shall not apply to commercial lines insurance and surplus
lines insurance.
Proposed law provides that the La. Citizens Property Insurance Corporation shall not provide
residential flood coverage.
Proposed law provides that insurers providing residential flood coverage shall do all of the
following:
(1)Notify the commissioner at least 30 days before writing residential flood coverage in this
state.
(2)File a plan of operation, financial projections, and any revisions of such with the
commissioner.
(3)Note the residential flood coverage premiums, deductibles and policy limits prominently on
the policy declarations page.
(4)Notify the commissioner in writing at least 60 days prior to the market end date of residential
flood coverage and to advise regarding all of the following:
(a)When an approved policy form will no longer be marketed in this state.
(b)When an approved policy form will be permanently withdrawn from this state.
(c)Whether or not residential flood coverage issued in this state under a discontinued
or withdrawn policy form shall remain in force.
(d)Whether existing residential flood coverage issued in this state under a discontinued
or withdrawn policy form shall continue to be renewed. (e)The policy form numbers being discontinued or withdrawn and the dates of original
approval.
Proposed law provides that in addition to excess flood insurance, insurers may issue any of the
following types of residential flood coverage:
(1)Standard flood coverage.
(2)Preferred flood insurance, which shall include the same coverage as standard flood insurance,
losses from water intrusion originating from outside the structure that are not otherwise
covered by flood damage, coverage for additional living expenses, and a requirement that any
loss under personal property be adjusted only on the basis of replacement costs up to the
policy limits.
(3)Customized flood insurance which includes coverage that is broader than the coverage
provided under standard flood insurance.
(4)Flexible flood insurance, which covers losses from the peril of flood.
(5)Supplemental flood insurance, which may provide coverage designed to supplement a flood
policy obtained from the National Flood Insurance Program or from an insurer issuing
standard or preferred flood insurance.
Proposed law authorizes insurers writing residential flood policies to issue flood insurance that
covers losses from the peril of flood using a definition of "flood" other than that provided in
proposed law (R.S. 22:1341) and authorizes the use of terms and conditions other than those
specified in proposed law (R.S. 22:1344), if the policy contains the following: "This is a flood
insurance policy that deviates from the flood insurance policy types described in R.S. 22:1344."
Proposed law provides that insurers offering private flood insurance may continue using policy forms
filed and approved before January 1, 2022.
Proposed law provides that insurers writing residential flood coverage shall establish flood coverage
rates in accordance with present law, and if filed with the commissioner before January 1, 2027, the
following shall apply:
(1)An insurer may establish and use rates in accordance with the rates, rating schedules, or
rating manuals filed by the insurer with the commissioner.
(2)Rates established pursuant to this proposed law are not subject to present law.
(3)Within 30 days after the effective date of the change, the insurer shall notify the
commissioner of any change to previously established rates and of the average statewide
percentage change in rates. (4)Actuarial data shall be maintained by the insurer for two years after the effective date of the
rate change and is subject to examination by the commissioner.
(5)If the commissioner determines that a rate is excessive or unfairly discriminatory, the
commissioner shall require the insurer to provide appropriate credit to affected policyholders
and an appropriate refund to affected former policyholders.
Proposed law provides that a producer shall provide written notice to be signed by the applicant
before the producer places residential flood coverage with an authorized or surplus lines insurer for
a property receiving flood coverage from the National Flood Insurance Program.
Proposed law provides that notice shall inform the applicant of the following:
(1)Coverage under the National Flood Insurance Program is provided at a subsidized rate.
(2)If an applicant discontinues coverage under the National Flood Insurance Program, the full
risk rate may apply to the property.
Proposed law provides that if an applicant does not have flood coverage, a producer shall inform the
applicant of the National Flood Insurance Program.
Proposed law provides that insurers writing standard flood insurance policies, preferred flood
insurance policies, customized flood insurance policies, flexible flood insurance policies, residential
flood insurance policies using a different definition of "flood" than that in proposed law, or
residential flood insurance policies with terms and conditions other than those described in proposed
law shall certify on the declarations page of the policy in bold typed print of at least 14 point font
whether the policy meets or exceeds or provides less coverage than "private flood insurance" as
defined in 42 U.S.C. 4012a(b)(7), conforms to other applicable federal regulations, and the standard
flood insurance policy under the National Flood Insurance Program.
Effective Jan. 1, 2022.
(Adds R.S. 22:1341-1346)
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Insurance to the original bill:
1. Make technical changes.
2. Authorize insurers writing residential flood policies to issue flood insurance that covers
losses from the peril of flood using a definition of "flood" other than that provided in
proposed law (R.S. 22:1341) and authorize the use of terms and conditions other than
those specified in proposed law (R.S. 22:1344), if the policy contains the following:
"This is a flood insurance policy that deviates from the flood insurance policy types described in R.S. 22:1344."
3. Authorize insurers offering private flood insurance to continue using policy forms filed
and approved before January 1, 2022.
4. Provide that insurers may certify that their flood insurance policies meet or exceed the
definition of "standard flood policy", as specified in 42 U.S.C. 4012a(b)(7) and
applicable federal regulations.
The House Floor Amendments to the engrossed bill:
1. Make technical changes.
2. Make it mandatory, rather than permissive, for insurers writing certain flood insurance
policies to certify whether the policy meets or exceeds or offers less coverage than
"private flood insurance" as defined in 42 U.S.C. 4012a(b)(7), conforms to other
applicable federal regulations, and the standard flood insurance policy under the National
Flood Insurance Program.
3. Provide model language for the insurer's certification and provide the location and format
for which the certification must appear in the policy.