ENROLLED
ACT No. 444
2023 Regular Session
HOUSE BILL NO. 511
BY REPRESENTATIVE ILLG
1 AN ACT
2 To amend and reenact R.S. 22:2055(6)(b)(introductory paragraph) and (i),
3 2056(C)(2)(introductory paragraph), (c), and (d), 2058(A)(introductory paragraph),
4 (1)(b)(iii) and (d), (3)(a)(ii) and (iv) and (b) and (c), and (B)(introductory paragraph)
5 and (6)(a), and 2061.1(A) and (D), to enact R.S. 22:2056(C)(2)(g) and 2062(E), and
6 to repeal R.S. 22:2062(A)(2)(c), relative to the Louisiana Insurance Guaranty
7 Association; to provide for the coverage, confidentiality, and payment of claims by
8 the Louisiana Insurance Guaranty Association; to provide for clarification of
9 definitions; to broaden the subject matter for discussion during an executive session;
10 to provide for a maximum assessment percentage; to provide for a minimum and
11 maximum amount that the Louisiana Insurance Guaranty Association may pay on
12 a claim; to clarify the calculation of premiums; to create policies and procedures for
13 insolvent insurers; to provide for an effective date; and to provide for related matters.
14 Be it enacted by the Legislature of Louisiana:
15 Section 1. R.S. 22:2055(6)(b)(introductory paragraph) and (i),
16 2056(C)(2)(introductory paragraph), (c), and (d), 2058(A)(introductory paragraph),
17 (1)(b)(iii) and (d), (3)(a)(ii) and (iv) and (b) and (c), and (B)(introductory paragraph) and
18 (6)(a), and 2061.1(A) and (D) are hereby amended and reenacted and R.S. 22:2056(C)(2)(g)
19 and 2062(E) are hereby enacted to read as follows:
20 §2055. Definitions
21 As used in this Part:
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1 (6) "Covered claim" means the following:
2 * * *
3 (b) "Covered claim" shall does not include the following:
4 (i) Any amount awarded as penalties, or punitive or exemplary damages,
5 including but not limited to those in the provisions of R.S. 22:1892 and R.S.
6 22:1973.
7 * * *
8 §2056. Creation of the association
9 * * *
10 C.
11 * * *
12 (2) The association may hold an executive session pursuant to R.S. 42:16 for
13 discussion of one or more of the following, and R.S. 44:1 through 41 42 shall not
14 apply to any documents as enumerated in R.S. 44:1(A)(2) which relate to one or
15 more of the following:
16 * * *
17 (c) Matters with respect to claims, groups of similar claims, or claim files,
18 except documents contained in those files which are otherwise deemed public
19 records.
20 (d) Prospective litigation against the association after formal written demand,
21 prospective litigation by the association after referral to counsel for review, or
22 pending litigation by or against the association, or discussion of litigation strategy
23 or settlement issues.
24 * * *
25 (g) A document or information protected from disclosure by any of the
26 exceptions provided for in this Section is not subject to discovery, subpoena, or other
27 disclosure, unless the association is compelled by a valid and final court order issued
28 in a proceeding to which the association was provided with notice and an opportunity
29 to object to the disclosure of the document or information.
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1 §2058. Powers and duties of the association
2 A. The association shall do all of the following:
3 (1)
4 * * *
5 (b) Satisfy such obligation by paying to the claimant an amount as follows:
6 * * *
7 (iii) An amount which is in excess of one hundred dollars and is less than
8 five hundred thousand dollars, per claim, subject to a minimum limit of one hundred
9 and one dollars and a maximum limit of five hundred thousand dollars per accident
10 or occurrence for all other covered claims.
11 * * *
12 (d) Have no obligation to defend an insured upon the association's payment
13 or tender of an amount equal to the lesser of the association's covered claim
14 obligation limit or the applicable policy limit, or written notice of extinguishment of
15 the obligation due to application of a credit. The association is entitled to conduct
16 confidential discovery to determine whether credits exist to extinguish its defense
17 obligation during the pendency of litigation, subject to maintaining the
18 confidentiality of any information.
19 * * *
20 (3)(a)
21 * * *
22 (ii) No member insurer may be assessed in any year an amount greater than
23 one two percent of that member insurer's net direct written premiums for the
24 preceding calendar year. If the maximum assessment, together with the other assets
25 of the association, does not provide in any one year an amount sufficient to make all
26 necessary payments, the funds available shall be prorated and the unpaid portion
27 shall be paid as soon thereafter as funds become available.
28 * * *
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1 (iv) Up to one-half of the The amount of the maximum assessment shall be
2 offset in the same manner that an offset is provided against the premium tax liability
3 in Item (3)(b)(ii) of this Subsection, against the assessment levied by R.S. 22:1476,
4 if such offset shall not be applied against any portion of the assessments to be
5 deposited to the credit of the Municipal Police Employees' Retirement System, the
6 Sheriffs' Pension and Relief Fund, and the Firefighters' Retirement System. To
7 qualify for this offset, the payer shall file a sworn statement with the annual report
8 required by R.S. 22:791 et seq., 821 et seq., and 831 et seq., showing as of December
9 thirty-first of the reporting period that at least the following amounts of the total
10 admitted assets of the payer, less assets in an amount equal to the reserves on its
11 policies issued in foreign countries in which it is authorized to do business and which
12 countries require an investment therein as a condition of doing business, are invested
13 and maintained in qualifying Louisiana investments as defined in R.S. 22:832(C). If
14 one-sixth of the total admitted assets of the payer are in qualifying Louisiana
15 investments, then the offset shall be sixty-six and two-thirds percent of the amount
16 otherwise assessed; if at least one-fifth of the total admitted assets of the payer are
17 in qualifying Louisiana investments, then the offset shall be seventy-five percent of
18 the amount otherwise assessed; if at least one-fourth of the total admitted assets of
19 the payer are in qualifying Louisiana investments, the offset shall be eighty-five
20 percent of the amount otherwise assessed; and if at least one-third of the total
21 admitted assets of the payer are in qualifying Louisiana investments, then the offset
22 shall be ninety-five percent of the amount otherwise assessed. If the total of the net
23 premium tax liability and the assessment for the expenses of the Department of
24 Insurance paid for the previous year was less than the offset allowed under Item
25 (3)(b)(ii) of this Subsection for the previous year, the member company may reduce
26 its assessment payment to the Louisiana Insurance Guaranty Association for the
27 current year by that difference.
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1 (b)(i) Issue to each insurer paying an assessment under this Part a certificate
2 of contribution, in a form prescribed by the commissioner, for the amount so paid up
3 to but not exceeding one-half of the maximum assessment. All outstanding
4 certificates shall be of equal dignity and priority without reference to amounts or
5 dates of issue.
6 (ii) A certificate of contribution issued to a member company may be offset
7 against its premium tax liability in an amount not to exceed ten percent of the
8 assessment for the year in which the assessment was paid in full and not to exceed
9 ten percent of the assessment per year for each of the nine calendar years following
10 the year in which such the assessment was paid in full, not to exceed a total offset of
11 one hundred percent for each assessment. During the calendar year of issuance of a
12 certificate of contribution, and yearly thereafter, a member shall at its option have
13 the right to show a certificate of contribution as an asset in the form approved by the
14 commissioner at percentages of the original face amount approved by the
15 commissioner, equal to the unused offset as of each such calendar year.
16 (iii) To the extent amounts have not been written off offset under Item (ii)
17 of this Subparagraph, the provisions of R.S. 22:2066 shall not apply. The
18 commissioner may promulgate a separate form in accordance with the
19 Administrative Procedure Act, to facilitate submission of a filing to recover the
20 amounts not offset pursuant to Item (ii) of this Subparagraph, subject to oversight by
21 the House Committee on Ways and Means and the Senate Committee on Revenue
22 and Fiscal Affairs.
23 (c) Not subject the premium dollars paid to an insurer by any "high net worth
24 insured" as defined in this Part to the assessment provided for in this Section for the
25 next calendar year Any insurer deducting may deduct the premium dollars from its
26 assessment shall provide by providing a net worth affidavit to the association from
27 each insured whose premium dollars are being deducted together with a statement
28 of the amount of premium dollars paid by such insured in accordance with
29 procedures established by the association.
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1 B. The association may do any of the following:
2 * * *
3 (6)(a) Refund to the member insurers in proportion to the contribution of
4 each member insurer to the association that amount by which the assets of the
5 association exceed the liabilities, if, at the end of any calendar year, the board of
6 directors finds that the assets of the association exceed the liabilities of the
7 association as estimated by the board of directors for the coming year.
8 * * *
9 §2061.1. Net worth exclusion
10 A. For purposes of this Part, "high net worth insured" shall mean means any
11 policyholder or named insured, other than any state or local governmental agency or
12 subdivision thereof, whose net worth exceeds twenty-five million dollars on
13 December thirty-first of the year prior to the year in which the insurer becomes an
14 insolvent insurer if an insurer. An insured's net worth on that date shall be deemed
15 to include the aggregate net worth of the insured and all of its subsidiaries and
16 affiliates as calculated on a consolidated basis. The consolidated net worth of the
17 insured and all of its affiliates shall be calculated on the basis of their fair market
18 values. The members of a group self-insurance fund formed pursuant to R.S.
19 23:1191 et seq. shall not be deemed to be affiliates of the fund, and shall not be
20 included in the determination of the net worth of the fund. For the purposes of this
21 Section, a group self-insurance fund, and each individual member of the fund upon
22 whose behalf a claim is submitted, shall be deemed to be policyholders or named
23 insureds of any policy of insurance issued to the fund.
24 * * *
25 D. The association shall establish maintain reasonable procedures subject to
26 the approval of the commissioner for requesting financial information from insureds
27 on a confidential basis for purposes of applying this Section, provided that the
28 Section. The financial information may be shared with any other association similar
29 to the association and the liquidator for the insolvent insurer on the same confidential
30 basis, but shall otherwise be kept strictly confidential. The financial information
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1 provided by the insured subject to these procedures is not subject to discovery,
2 subpoena, or other disclosure, unless the association and the high net worth insured
3 are compelled to disclose this information by a valid and final court order in a
4 proceeding to which the association was provided with notice and an opportunity to
5 object to the disclosure of the information. Any request to an insured seeking
6 financial information must shall advise the insured of the consequences of failing to
7 provide the financial information. If an insured refuses to provide the requested
8 financial information where it is requested and available, the association may, until
9 such time as the information is provided, provisionally deem the insured to be a high
10 net worth insured for the purpose of denying a claim under pursuant to Subsection
11 B of this Section.
12 * * *
13 §2062. Exhaustion of other coverage
14 * * *
15 E. The association is entitled to conduct confidential discovery to determine
16 whether other available insurance as provided by this Section exists, the applicable
17 limits thereof, the amount of a claimant's recovery, the efforts to exhaust any
18 applicable limits, and to determine whether its obligations to the claimant have been
19 extinguished by the application of any applicable credits during the pendency of
20 litigation, subject to maintaining adequate procedures to protect the confidentiality
21 of any information obtained through the discovery.
22 Section 2. R.S. 22:2062(A)(2)(c) is hereby repealed in its entirety.
23 Section 3. R.S. 22:2058(A)(3)(a)(ii) as amended by this Act that provides a two
24 percent maximum assessment by the La. Insurance Guaranty Association shall be applied
25 prospectively and shall become effective on January 1, 2024.
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1 Section 4. This Act shall become effective upon signature by the governor or, if not
2 signed by the governor, upon expiration of the time for bills to become law without signature
3 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
4 vetoed by the governor and subsequently approved by the legislature, this Act shall become
5 effective on the day following such approval.
SPEAKER OF THE HOUSE OF REPRESENTATIVES
PRESIDENT OF THE SENATE
GOVERNOR OF THE STATE OF LOUISIANA
APPROVED:
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