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 1049 Original 2022 Regular Session Seabaugh
Abstract: Authorizes the creation of self-insurance funds for the purpose of providing auto
insurance for vehicles which transport timber and agriculture products.
Proposed law provides that any five or more Louisiana timber or agriculture companies, who are not
public entities, each of whom has a positive net worth and is financially solvent, may pool their
liabilities and self-insure for the purposes of maintaining automobile coverage for timber and
agriculture transportation vehicles. Proposed law provides that members of the fund must also be
members of one or more bona fide trade or professional associations. Proposed law defines "bona
fide trade or professional association" as an active trade or professional association that promotes
La. timber or agriculture production and has been in existence and conducted regular meetings for
a period of not less than five years.
Proposed law provides that no fund can become operative until the fund is issued a certificate of
authority by the Dept. of Insurance after the department has approved the application for the fund
and the documents required to establish solvency and the ability to properly manage and pay claims.
Proposed law provides that no person may solicit membership for a fund unless they are licensed by
the department as a licensed property and casualty insurance agent. Proposed law sets forth
requirements for insurance agents and brokers who solicit membership for the fund and for the
payment of commissions.
Proposed law provides that the rates for coverage, or the costs of premiums, that may be charged to
the members must be in an amount that is actuarially justified. Proposed law further provides that
once the rate filing is made to the department, the premium rates may be charged to the members of
the fund for automobile coverage within 90 days after the rate filing is made.
Proposed law provides that, in order to maintain financial stability of the fund, the commissioner of
insurance is to require two or more member timber or agriculture companies to maintain a combined
net worth or $1,000,000 or five or more principals of the member companies to maintain a combined
net worth of $1,000,000. Proposed law further provides that financial statements must not be more
than one year old when submitted to the commissioner of insurance for approval of the self-
insurance fund. Proposed law requires further security in the form of excess insurance or reinsurance
in an amount and in form that is approved by the Dept. of Insurance to insure the ability to properly
manage and pay claims.
Proposed law provides that, if the fund employs one or more third-party administrators, each third- party administrator of the fund must post a bond. Proposed law provides that, if the fund employees
its own administrator, the fund is required to purchase a bond, errors and omission's insurance, or
other security that is approved by the Dept. of Insurance.
Proposed law provides that a self-insurer's fund must obtain a minimum of $750,000 in premiums
in the fund for the first year and $2,000,000 in premiums for each year thereafter.
Proposed law provides for agreements to pool liabilities to be set forth in the indemnity agreement
or other instruments. Proposed law provides for annual premium audits to be conducted by an
independent audit firm that is approved by the department.
Proposed law provides for proper audits by the fund in a form that is acceptable to the department.
Proposed law provides proposed law does not prohibit the legislative auditor from also reviewing
the records and conducting an audit of the fund.
Proposed law provides that each member must sign mutual indemnity agreements to cover the risk
of liability covered by the fund and copies of the agreements will be presented to the Dept. of
Insurance when the application is made for approval of the fund. Proposed law provides that proof
of advanced payments to the fund of at least 25% of each member's first year estimated annual
earned premiums must be provided with the application.
Proposed law provides that moneys deposited into the fund may be invested in certain interest-
bearing or interest-accruing investments and in certain bonds and securities that are publically traded
or have certain minimum rating with Moody's, Standard and Poor's, or Fitch.
Proposed law further provides that the department may impose fines and penalties for failure to
comply with requirements to operate the fund as required by proposed law. Proposed law further
provides that the department may revoke the authority to operate the fund or issue cease and desist
orders if the requirements of proposed law are not maintained by the fund and its members.
Proposed law provides for standards to which self-insurers must adhere and provides for authority
for the department to take action when a self-insurer is in hazardous financial condition.
Proposed law provides that, if a fund becomes insolvent, the Dept. of Insurance will require the fund
to submit a plan to take necessary action to restore solvency and plan must be approved by the
department. Proposed law provides that, if a fund cannot be restored, the commissioner of insurance
is authorized by proposed law to execute delinquency proceedings and place the fund into
confidential administrative supervision, conservation, rehabilitation, or liquidation. Proposed law
further provides that the 19th Judicial District Court has exclusive jurisdiction to hear any
delinquency proceeding instituted by the commissioner for the failure of a fund to comply with the
approved corrective action plan and the court may issue an injunction to restrain the fund and its
officers, agents, directors, or employees from transacting any insurance business or disposing of
property until further action by the court.
Proposed law provides that an examination of the fund is to be made by the commissioner at least every five years. Proposed law provides that the examiners are to be appointed by the commissioner,
who is to instruct them on the scope of the examination in order to determine if the fund is operating
in compliance with proposed law, and the examiners expenses are to be paid by the fund.
Proposed law provides that the commissioner may employ investigators to investigate complaints
received against a fund that is approved to operate under proposed law or against any unauthorized
group self-insurance fund that is reported to be operating in this state.
Proposed law provides that a fund wishing to dissolve may apply to the commissioner. Proposed law
further provides the requirements for the dissolution of the fund, including the requirements for
payment of future claims and the methods to secure future obligations of the fund.
Effective August 1, 2022.
(Adds R.S. 3:4341.1 - 3:4341.16)