RDCSB428 4282 4983
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)]
DIGEST
SB 428 Reengrossed 2022 Regular Session Robert Mills
Present law prohibits reduction of the liability limits contained in a policy or contract of
insurance by 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 requirement that the commissioner's waiver be in writing and
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 prohibits reducing liability limits based on expenses of defense for 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 requires the commissioner to waive the prohibition for certain types of
insurance.
Proposed law retains present law.
Present law authorizes waiver of other types of insurance not listed in present law upon
consideration by the commissioner of relevant factors, including the level of market
competition, the nature and design of the product, and the availability of insurance coverage.
Proposed law authorizes the commissioner to waive the prohibition for insurance types not
listed in present law after he considers the customs of the industry and the interests of the
particular insured.
Present law subjects every policy or contract for which a waiver is executed to the following
requirements:
(1)Expenses used to reduce the liability limits shall 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 shall include only 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 shall not exhaust the entire amount of liability coverage.
Proposed law specifies that defense expenses may include only reasonable attorney fees
directly connected to the insurer's defense to the list of allowable defense expenses.
Prohibits overhead, unallocated loss, adjustment expenses, or other unallocated expenses
incurred by the insurer in the ordinary course of business from being included as defense
expenses.
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
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expenses shall not 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 repeals 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.
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill
1. Make technical changes.
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Insurance to the
reengrossed bill:
1. Restore present law (R.S. 22:1272(B)(2) and (3))
2. Restore a provision in present law (R.S. 22:1272(A)) providing for the power of
the commissioner to waive the prohibition on reducing liability limits based on
expenses of defense in certain circumstances.
3. Make technical changes.
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