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2024 Regular Session
SENATE BILL NO. 323
BY SENATORS TALBOT AND BASS
INSURANCE CLAIMS. Provides for fair claims processing. (7/1/24)
1 AN ACT
2 To amend and reenact R.S. 22:1892(A)(3) and (4), (B)(1), and (H), to enact R.S.
3 22:1892(A)(7), (B)(7), (I), (J), and (K), and 1892.2, and to repeal R.S. 22:1973,
4 relative to claims settlement practices; to provide definitions; to provide for loss
5 adjustment; to provide for the payment of claims; to provide for practices following
6 a catastrophe; to provide for good faith duty; to provide for breach of good faith
7 duty; to provide for certain notices; to provide for penalties; to provide for causes of
8 action; and to provide for related matters.
9 Be it enacted by the Legislature of Louisiana:
10 Section 1. R.S. 22:1892(A)(3) and (4), (B)(1), and (H) are hereby amended and
11 reenacted and R.S. 22:1892(A)(7), (B)(7), (I), (J), and (K), and 1892.2 are hereby enacted
12 to read as follows:
13 §1892. Payment and adjustment of claims; policies other than life and health and
14 accident; good faith duty; breach of good faith duty; vehicle
15 damage claims; extension of time to respond to claims during
16 emergency or disaster; penalties; arson-related claims suspension
17 A.(1) * * *
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1 (3) Except in the case of catastrophic loss, the insurer shall initiate loss
2 adjustment of a property damage claim and of a claim for reasonable medical
3 expenses within fourteen days after notification of loss by the claimant. In the case
4 of catastrophic loss, as defined in this Section, the insurer shall initiate loss
5 adjustment of a property damage claim within thirty days after notification of loss
6 by the claimant except that the commissioner may promulgate a rule for extending
7 the time period for initiating a loss adjustment for damages arising from a
8 presidentially declared emergency or disaster or a gubernatorially declared
9 emergency or disaster up to an additional thirty days. Thereafter, only one additional
10 extension of the period of time for initiating a loss adjustment may be allowed and
11 must shall be approved by the Senate Committee on Insurance and the House
12 Committee on Insurance, voting separately. Failure to comply with the provisions
13 of this Paragraph shall subject the insurer to the penalties provided in R.S. 22:1973
14 a penalty of the greater of five thousand dollars or the amount provided for in
15 Subsection I of this Section.
16 (4) All insurers shall make a written offer to settle any property damage
17 claim, including a third-party claim, within thirty the applicable number of days
18 after receipt of satisfactory proofs of loss of that claim. that is provided pursuant
19 to this Section or R.S. 22:1892.2, provided that this period shall be extended by
20 the number of days, if any, the insurer initiates loss adjustment earlier than the
21 deadline provided in Paragraph (3) of this Subsection.
22 * * *
23 (7) The provisions of this Subsection do not apply to surety bonds.
24 B.(1)(a) Except as provided in Subparagraph (b) of this Paragraph, failure to
25 make such payment within thirty days after receipt of such satisfactory written
26 proofs and demand therefor or failure to make a written offer to settle any property
27 damage claim, including a third-party claim, within thirty days after receipt of
28 satisfactory proofs of loss of that claim, as provided in Paragraphs (A)(1) and (4) of
29 this Section, respectively, or failure to make such the payment within thirty days
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1 after written agreement or settlement as provided in Paragraph (A)(2) of this Section
2 when such the failure is found to be arbitrary, capricious, or without probable cause,
3 shall subject the insurer to a penalty, in addition to the amount of the loss, of fifty
4 percent damages on the amount found to be due from the insurer to the insured, plus
5 any proven economic damages sustained as a result of the breach, or one
6 thousand dollars, whichever is greater, payable to the insured, or in the event a
7 partial payment or tender has been made, fifty percent of the difference between the
8 amount paid or tendered and the amount found to be due plus any proven economic
9 damages sustained as a result of the breach as well as in either instance
10 reasonable attorney fees and costs. Such The penalties, if awarded, shall not be used
11 by the insurer in computing either past or prospective loss experience for the purpose
12 of setting rates or making rate filings.
13 (b) In the case of a presidentially or gubernatorially declared disaster, failure
14 to make such payment within thirty days after receipt of such satisfactory written
15 proofs and demand therefor or failure to make a written offer to settle any property
16 damage claim, including a third-party claim, within thirty days after receipt of
17 satisfactory proofs of loss of that claim, as provided in Paragraphs (A)(1) and (4) of
18 this Section, respectively, or failure to make such payment within thirty days after
19 written agreement or settlement as provided in Paragraph (A)(2) of this Section when
20 such failure is found to be arbitrary, capricious, or without probable cause, shall
21 subject the insurer to a penalty, in addition to the amount of the loss, of fifty percent
22 damages on the amount found to be due from the insurer to the insured, or two
23 thousand five hundred dollars, whichever is greater, payable to the insured, or in the
24 event a partial payment or tender has been made, fifty percent of the difference
25 between the amount paid or tendered and the amount found to be due as well as
26 reasonable attorney fees and costs or two thousand five hundred dollars, whichever
27 is greater. The penalties, if awarded, shall not be used by the insurer in computing
28 either past or prospective loss experience for the purpose of setting rates or making
29 rate filings catastrophic loss, any penalty for payment and adjustment of a first-
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1 party claim arising under an insurance policy for immovable property shall be
2 subject to penalty pursuant to the provisions of R.S. 22:1892.2, and the
3 provisions of this Paragraph shall not be applicable.
4 (c) For the purposes of this Section and R.S. 22:1892.2, the following
5 definitions apply:
6 (i) "Catastrophic loss" means a loss that arose from a natural disaster,
7 windstorm, or significant weather-related event that was a presidentially
8 declared emergency or disaster or a gubernatorially declared emergency or
9 disaster.
10 (ii) "Immovable property" means a tract of land with its component
11 part, including a factory-built or modular home as defined in R.S. 51:911.22.
12 (iii) "Residential property" means property defined as improvements for
13 residential purposes pursuant to R.S. 47:2322.
14 * * *
15 (7) Claims for penalties and attorney fees pursuant to this Subsection are
16 subject to a liberative prescriptive period of two years.
17 * * *
18 H. The Louisiana Insurance Guaranty Association, as provided in R.S.
19 22:2051 et seq., and the Louisiana Citizens Property Insurance Corporation, as
20 provided in R.S. 22:2291 et seq., shall not be subject to the provisions of Code of
21 Civil Procedure Article 591 et seq., or any other provision allowing a class action,
22 for any damages including any penalties awarded pursuant to the provisions of this
23 Section. The Louisiana Insurance Guaranty Association, as provided in R.S.
24 22:2051 et seq., shall also not be liable for any special damages or penalties
25 provided for in this Section.
26 I.(1)(a) An insurer, including but not limited to a foreign line or surplus
27 line insurer, owes to its insured a duty of good faith and fair dealing. The
28 insurer has an affirmative duty to adjust claims fairly and promptly and to
29 make a reasonable effort to settle claims with the insured or the claimant, or
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1 both. Any insurer that breaches the duties of this Subsection shall be liable for
2 any proven economic damages sustained as a result of the breach. For claims
3 not involving loss to an insured's immovable property, the insured may be
4 awarded penalties in an amount not to exceed fifty percent of the damages
5 sustained or five thousand dollars, whichever is greater, together with attorney
6 fees and costs actually incurred due to the breach. Any penalty for breach of a
7 duty imposed by this Subsection based solely upon a failure to pay the amount
8 of any claim due any person insured by the contract within the period provided
9 by law following receipt of satisfactory proof of loss shall be awarded only if the
10 breach is found to be arbitrary, capricious, or without probable cause.
11 (b) For claims arising under an insurance policy covering loss to
12 immovable property, the insurer shall instead be subject to the provisions of
13 Subsection B of this Section or R.S. 22:1892.2, as appropriate.
14 (2) Any one of the following acts, if knowingly committed or performed
15 by an insurer or representative of the insurer, constitutes a breach of the
16 insurer's duties imposed in Paragraph (1) of this Subsection:
17 (a) A misrepresentation of pertinent facts or insurance policy provisions
18 relating to any coverages at issue.
19 (b) A failure to pay a settlement within thirty days after an agreement
20 is reduced to writing.
21 (c) A denial of coverage or attempting to settle a claim on the basis of an
22 application which the insurer knows was altered without notice to, or
23 knowledge or consent of, the insured.
24 (d) A misrepresentation to a claimant as to the applicable prescriptive
25 period.
26 (e) A failure to pay claims pursuant to R.S. 22:1893 when the failure is
27 arbitrary, capricious, or without probable cause.
28 (3) The provisions of this Subsection shall not create a separate cause of
29 action against a representative of the insurer distinct and apart from the cause
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1 of action against the insurer.
2 J.(1) The insured, claimant, or a representative of the insured or
3 claimant has a duty of good faith and fair dealing when asserting a claim for
4 insurance coverage.
5 (2) Any one of the following acts, if knowingly committed or performed
6 by an insured, claimant, or representative of the insured or claimant, constitutes
7 a breach of the insured’s duties imposed in Paragraph (1) of this Subsection:
8 (a) A failure to comply with affirmative contractual duties or obligations
9 established in the insurance policy, including the duty to act in good faith in
10 providing information regarding the claim, in making demands of the insurer,
11 in setting deadlines, and in attempting to settle the claim.
12 (b) A misrepresentation of pertinent facts or insurance policy provisions
13 relating to any coverages at issue.
14 (c) A submission of an estimate or claim for damages that lacks a basis
15 for coverage under the terms of the policy or lacks a good faith evidentiary
16 basis.
17 (3) The duty imposed by this Subsection does not create a separate cause
18 of action but shall be considered in accordance with Paragraph (4) of this
19 Subsection.
20 (4) In any action against an insurer pursuant to this Section or R.S.
21 22:1892.2, if the trier of fact determines that the insured, claimant, or
22 representative of the insured or claimant violated the provisions of this
23 Subsection, the trier of fact shall consider that conduct in determining whether
24 or not the insured is to be awarded penalties or attorney fees otherwise provided
25 for in accordance with R.S. 22:1892 and 1892.2.
26 (5) This Subsection shall not impact any right or remedy available to the
27 insurer, including but not limited to the right to void the policy or contract or
28 deny coverage.
29 K. The provisions of this Section shall not be applicable to claims made
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1 under life and health and accident insurance policies.
2 * * *
3 §1892.2. Catastrophic loss claims settlement practices; penalties and attorney
4 fees
5 A.(1) An insurer shall not violate any provision of this Section or R.S.
6 22:1892(A)(4) or (I).
7 (2) For catastrophic losses arising under an insurance policy for
8 residential property, an insurer shall transmit payment of the amount of any
9 claim due to any insured within sixty days after receipt of satisfactory written
10 proof of loss.
11 (3) For catastrophic losses arising under an insurance policy for
12 immovable property, other than residential property, an insurer shall transmit
13 payment of the amount of any claim due to any insured within ninety days after
14 receipt of satisfactory written proof of loss. The timeline provided for in this
15 Paragraph may be extended up to thirty additional days by the commissioner
16 for commercial policies insuring multiple locations.
17 B.(1) Failure to comply with Subsection A of this Section, when the
18 failure is found to be arbitrary, capricious, or without probable cause, shall
19 subject the insurer to a penalty payable to the insured, in addition to the
20 amount of the loss, of only the greater of fifty percent of the amount found to
21 be due from the insurer to the insured, or in the event a partial payment or
22 tender has been made, fifty percent of the difference between the amount timely
23 paid or tendered and the amount found to be due, plus proven economic
24 damages sustained as a result of the breach, or two thousand five hundred
25 dollars, whichever is greater, together with, in either instance, reasonable
26 attorney fees and costs actually incurred. The penalties, if awarded, shall not be
27 used by the insurer in computing either past or prospective loss experience for
28 the purpose of setting rates or making rate filings.
29 (2) Claims for penalties and attorney fees pursuant to this Section are
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1 subject to a liberative prescription of two years.
2 C.(1) As a condition precedent to bringing an action pursuant to this
3 Section, the insurer shall be given sixty days' written notice of the violation by
4 the insured or his representative, hereinafter referred to in this Section as the
5 cure period notice.
6 (2) The cure period notice may be through either a form provided by the
7 department or by formal written demand providing sufficient notice of the facts
8 and circumstances of the dispute.
9 (3) If the insurer pays within sixty days after the insurer receives cure
10 period notice the full amount alleged to be due in the notice, together with any
11 actual expenses incurred by the insured and claimed in the notice, including any
12 attorney fees, not to exceed twenty percent of the amount alleged to be due
13 under the policy, there shall be no further cause of action pursuant to this
14 Section regarding that noticed demand.
15 (4) If the insurer does not pay the full amount demanded by the cure
16 period notice as provided for in Paragraph (3) of this Subsection but does make
17 a partial payment within sixty days of the insurer's receipt of the cure period
18 notice, the penalty otherwise due, if any, on the amount actually paid by the
19 insurer within sixty days of the insurer's receipt of the cure period shall be
20 reduced by half.
21 (5) The insurer that is the recipient of a cure period notice shall respond
22 to the insured or his representative within sixty days.
23 (6) If a cure period notice is transmitted within the last ninety days prior
24 to the running of prescription, the applicable prescriptive period for an action
25 filed pursuant to the provisions of this Section, or for an action concerning the
26 underlying policy dispute, shall be suspended for a period until thirty days after
27 the insurer transmits its written response to the cure period notice.
28 (7) If any suit is filed prior to transmitting the cure period notice
29 required by this Subsection, it shall be automatically stayed until sixty days
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1 after the cure period notice is received. The delay for answering any suit shall
2 automatically be extended until thirty days after the end of the cure period. If
3 the insurer timely pays the full amount demanded as provided for in Paragraph
4 (3) of this Subsection, any cause of action prematurely filed shall be subject to
5 dismissal at the insured's cost.
6 D.(1) An insurer may make additional requests for information or
7 inspection if during its investigation of the claim the additional requests are
8 considered necessary. A request for information that is in the possession of the
9 insurer or its representatives shall not extend any of the insurer's deadlines.
10 (2) Nothing in this Subsection shall be construed to relieve an insurer of
11 its obligation to transmit payment of the amount of any claim due to any
12 insured within the deadline following receipt of satisfactory proof of loss
13 concerning the amount as set forth in Paragraphs (A)(2) and (A)(3) of this
14 Section, nor to extend any deadline for payment when the requested
15 information or inspection is found by the trier of fact to be unnecessary
16 considering all other proof of the loss then available to the insurer.
17 (3) Nothing in this Subsection shall be construed to prohibit an insured
18 from making a supplemental claim, nor to relieve an insurer from the obligation
19 to conduct a supplemental investigation, or to make a supplemental payment,
20 if warranted by the facts of a supplemental claim. A supplemental claim adds
21 newly found damage or additional costs to the original claim. The fact that an
22 insurer makes a supplemental payment shall not itself be construed as evidence
23 of a violation of this Section or R.S. 22:1892.
24 (4) An insurer's tender of undisputed additional amounts due to the
25 insured within thirty days of the insurer's receipt of a valid appraisal award
26 does not itself constitute evidence of bad faith on the part of the insurer.
27 E. The provisions of this Section shall not be applicable to claims made
28 under any type of policy or contract of insurance specified in R.S. 22:1811 or
29 1821 or Chapter 10 of Title 22 of the Louisiana Revised Statutes of 1950.
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1 F. The Louisiana Insurance Guaranty Association, as provided in R.S.
2 22:2051 et seq., and the Louisiana Citizens Property Insurance Corporation, as
3 provided in R.S. 22:2291 et seq., shall not be subject to the provisions of Code
4 of Civil Procedure Article 591 et seq., or any other provision allowing a class
5 action, for any damages, that includes any penalties awarded pursuant to the
6 provisions of this Section. The Louisiana Insurance Guaranty Association, as
7 provided in R.S. 22:2051 et seq., shall also not be liable for any special damages
8 or penalties provided for in this Section.
9 Section 2. R.S. 22:1973 is hereby repealed in its entirety.
10 Section 3. The Louisiana State Law Institute is hereby authorized and directed to
11 revise the Code of Evidence and Title 22 of the Louisiana Revised Statutes of 1950, to
12 change all references to "R.S. 22:1973" to "R.S. 22:1892" or "R.S. 22:1892.2", including but
13 not limited to Code of Evidence Article 411(B)(3) and R.S. 22:41(13), 1296(B)(3)(d),
14 1332(B)(4), and 1893(D).
15 Section 4. This Act shall become effective on July 1, 2024. If vetoed by the governor
16 and subsequently approved by this legislature, this Act shall become effective on the day
17 following such approval or July 1, 2024, whichever is later.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Beth O'Quin.
DIGEST
SB 323 Reengrossed 2024 Regular Session Talbot
Present law provides for payment and adjustment procedures for property damage insurance
claims.
Present law provides bad faith penalties for an insurer that fails to comply with present law.
Proposed law retains present law but removes bad faith penalties for an insurer not in
compliance with present law, and adds an insurer that is not in compliance with present law
is subject to a penalty not greater than $5,000 or for bad faith penalties, whichever is greater.
Present law provides certain procedural requirements if the president or governor declares
a state of disaster.
Proposed law defines "catastrophic loss", "immovable property", and "residential property".
Proposed law provides property damage insurance claims are subject to a two year liberative
prescription period.
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Proposed law provides any penalty for breach of a duty that is based solely on failure to pay
the amount of the claim due within the time required by proposed law following receipt of
satisfactory proof of loss will only be awarded a penalty if the breach is found to be
arbitrary, capricious, or without cause.
Proposed law requires an insurer transmit payment due for a catastrophic loss of a residential
property within 60 days after receipt of satisfactory proof of loss.
Proposed law requires an insurer transmit payment due for a catastrophic loss of an
immovable property within 90 days after receipt of satisfactory proof of loss.
Present law provides an exemption from class actions and penalties awarded pursuant to
present law for the La. Insurance Guaranty Association and La. Citizens Property Insurance
Corporation.
Proposed law retains present law and adds an exemption for the La. Insurance Guaranty
Association from any liability for any special damages provided for in proposed law.
Proposed law provides an insurer owes to his insured a duty of good faith and fair dealing.
Proposed law provides an insurer in bad faith is subject to penalties not to exceed 50% or
the damages or $5,000, whichever is greater.
Proposed law provides an insurer breaches its duty of good faith and fair dealing by any of
the following acts:
(1)Misrepresents pertinent facts or insurance policy provisions relating to any coverages
at issue.
(2)Fails to pay a settlement within thirty days after an agreement is reduced to writing.
(3)Denies coverage or attempting to settle a claim on the basis of an application which
the insurer knows was altered without notice to, or knowledge or consent of, the
insured.
(4)Misleads a claimant as to the applicable prescriptive period.
(5)Fails to pay claims when the failure is arbitrary, capricious, or without probable
cause.
Proposed law provides the insured, claimant, and representatives of the insured or claimant
have a duty of good faith and fair dealing. Proposed law provides bad faith actions
committed by the insured, claimant, or his representative are any of the following:
(1)Fails to comply with contractual duties established by his insurance policy, that
includes providing requested information regarding the claim, making demands on
the insurer, setting deadlines, and attempting to settle the claim.
(2)Misrepresents facts or insurance policy provisions that relate to any coverage at
issue.
(3)Submits an estimate for damages that lacks a basis for coverage under the policy
terms or lacks a good faith evidentiary basis.
Proposed law does not impact any right or remedy available to the insurer, including but not
limited to voiding the policy or contract or deny coverage.
Proposed law provides that if a trier of fact determines the insured, claimant, or
representatives of the insured or claimant breach their duty of good faith and fair dealing,
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the insured or claimant is not entitled to recover any penalties or attorney fees.
Proposed law provides for an insurer acting in good faith and fair dealing and provides the
insurer is subject to penalties for violating proposed law.
Proposed law provides penalties for an insurer that fails to comply with proposed law.
Proposed law requests the La. State Law Institute to revise citations listed in present law to
conform with proposed law.
Effective July 1, 2024.
(Amends R.S. 22:1892(A)(3) and (4), (B)(1), and (H); adds R.S. 22:1892(A)(7), (B)(7), (I),
(J), and (K) and 1892.2; repeals R.S. 22:1973)
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Insurance to the original
bill
1. Makes technical changes.
2. Clarifies the penalty amounts for a denied claim.
3. Provides an insured, a claimant, or his representative has a duty of good faith.
4. Clarifies what constitutes a breach of the good faith duty for an insured, a
claimant, or his representative.
5. Requests the La. State Law Institute to update present law to conform with
proposed law.
6. Changes the effective date to July 1, 2024.
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill
1. Makes technical changes.
2. Clarifies what constitutes a breach of the good faith duty for an insurer.
3. Clarifies the time period a payment is due for a catastrophic loss of an
immovable property.
4. Clarifies the time period a payment is due for a catastrophic loss of a
residential property.
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