The original instrument was prepared by Carla S. Roberts. The following digest,
which does not constitute a part of the legislative instrument, was prepared by Beth
O'Quin.
DIGEST
SB 428 Engrossed 2022 Regular Session Robert Mills
Present law prohibits reduction of the liability limits contained in a policy or contract of insurance
due to the expenses of defense in a suit under the policy or contract unless the commissioner of
insurance executes a written waiver authorizing the reduction.
Proposed law removes the commissioner's requirement to execute a written waiver to prohibit the
reduction of liability limits, but authorizes the commissioner to waive the prohibition to the
reduction of the liability limits contained in a policy or contract due to the expenses of defense in
a suit under a policy or contract.
Present law the prohibition applies to all personal lines, medical malpractice, commercial vehicle,
and commercial general liability.
Proposed law prohibits the commissioner from waiving the prohibition for all personal lines and
medical malpractice and removes the prohibition for commercial vehicle and commercial general
liability.
Present law authorizes waiver of the prohibition for certain types of insurance and requires the
commissioner to waive the prohibition for certain types of insurance.
Proposed law removes present law.
Present law authorizes waiver of other types of insurance not listed in law upon consideration by the
commissioner of the level of market competition, the nature and design of the product, the
availability of insurance coverage, and other relevant factors.
Proposed law retains present law but authorizes the commissioner to waive the prohibition provided
in law except for certain insurance types after he considers the customs of the industry and the
interest of the particular insured.
Present law requires that every policy or contract for which a waiver is executed is subject to the
following requirements:
(1)Expenses used to reduce the liability limits did not include overhead costs, adjusting
expenses, or other expenses incurred by the insurer in the ordinary course of business.
(2)Expenses used to reduce the liability limits to only include reasonable attorney fees and
expenses directly connected to the insurer's defense of a specific liability claim on behalf of an insured and other litigation expenses directly arising from the defense of the claim.
(3)Expenses are not to exhaust the entire amount of liability coverage.
Proposed law removes the executed waiver requirement by the commissioner and adds reasonable
attorney fees that are directly connected to the insurer's defense can be defense expenses, and
prohibits the defense expenses for overhead, unallocated loss, adjustment expenses, or other
unallocated expenses incurred by the insurer in the ordinary course of business.
Present law authorizes the commissioner to limit the amount of defense expenses used to reduce the
liability limits or establish a minimum of liability coverage from which defense expenses cannot be
deducted, and to limit or define the amount of expenses that reduce the liability limits for all or
specific types of insurance coverage.
Proposed law removes present law.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Amends R.S. 22:1272)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original bill
1. Adds the commissioner can waive the prohibition to the reduction of the liability
limits contained in a policy or contract due to the expenses of defense in a suit under
a policy or contract.
2. Prohibits the commissioner from waiving the prohibition on all personal lines and
medical malpractice.
3. Authorizes the commissioner can waive the prohibition provided in law upon
considering the customs of the industry and the interest of the particular insured.
4. Adds attorney fees can be included as a defense expense.
5. Prohibits overhead, unallocated loss, adjustment expenses, or other allocated
expenses in the ordinary course of business to be considered a defense of expenses.