Gov. Landry signs Temple-backed insurance package

Louisiana Gov. Jeff Landry has enacted new laws at the urging of Insurance Commissioner Tim Temple, who has said a more industry-friendly climate should result in lower premium rates for Louisiana residents.

Landry signed four bills Tuesday that benefit the insurance industry with new freedoms to raise rates on customers, cancel policies and walk away with lighter legal penalties when they refuse to pay claims. 

The bills were part of Temple’s agenda to create what he called a “free market” for insurance companies in the state. Before winning election last fall, the Republican commissioner spent more than two decades in the insurance sector, owning and managing the kinds of companies he now regulates.  

Departing from the way his predecessor, Jim Donelon, ran the Louisiana Department of Insurance, Temple has promised less regulation in the hopes of luring more homeowner insurance companies to the state. He has said more competition should lead to lower rates for consumers and end the coverage crisis that followed five costly natural disasters over a 12-month stretch between 2020 and 2021. 

However, when pressed by skeptical lawmakers, the commissioner has refused to say definitively that the changes will cause homeowner premiums to drop, and consumer advocates have questioned his approach, arguing it’s a gamble based on creating advantages for the insurance industry. 

“Tim Temple’s insurance bill package is a win for insurance companies and does nothing to guarantee help for the people of Louisiana suffering through this insurance crisis,” Housing Louisiana said in a statement. “It will increase insurance company profits by permitting them to drop long time policy holders, raise rates without needed reviews and limit lawsuits when insurance companies break the law.”

The package included a so-called “tort reform” measure, Senate Bill 323, sponsored by Sen. Kirk Talbot, R-River Ridge, who chairs his chamber’s insurance committee. The bill makes changes to the state’s “bad faith” law enacted after Hurricane Katrina when lawmakers dealt with homeowner insurance companies not treating their customers fairly.

The bad faith law allowed a policy holder to collect an additional penalty of up to 200% of the value of the loss if a court ruled the insurance company deliberately avoided attempts to negotiate a claim and pay what it owed after a catastrophe. Talbot’s bill reduced the penalty to 50% or $5,000, whichever is greater.

It also gives insurance companies additional time to pay claims with an extended “cure period” to work through negotiations with a homeowner. 

At Tuesday’s bill signing, Landry noted Temple recommended the legislation and said the insurance commissioner has committed to reworking the laws if the state doesn’t see lower rates. 

Similar promises were made but not kept after a tort reform package was enacted in 2020 under Donelon to address high auto insurance rates. Donelon and lobbyists with the Louisiana Association of Business and Industry told the public that the changes would reduce auto premiums within a year, but the opposite actually happened. 

After four years, rates have only increased, dealing a double blow to consumers who are now without some of the tools they previously had to take insurance companies to court. Despite this, Louisiana legislators have made no efforts to try to repeal the failed auto insurance tort reform legislation.

Another component of Temple’s agenda was House Bill 611, sponsored by Rep. Gabe Firment, R-Pollock. It repeals Louisiana’s unique three-year rule, which prohibits insurance companies from raising deductibles and either canceling or not renewing homeowner policies in effect for more than three years.

Under the new law, insurance companies are allowed to cancel up to 5% of their policies each year as long as the covered properties aren’t all in one parish. The 5% mark is not a hard cap because companies can cancel as many policies as they want with approval from the insurance commissioner. 

Temple has said the bill was needed to bring more insurance competition to Louisiana. 

Louisiana, particularly the southern part of the state, has some of the highest property insurance premiums in the nation. An increase in the frequency and strength of hurricanes has fueled rate increases and led some of the largest insurers to stop offering policies in areas below Interstate 10.

Temple and other Republicans have argued the three-year rule is the biggest obstacle keeping insurance companies from doing business in Louisiana. Democrats disagree, saying it is the only thing stopping further cancellations and rate hikes. They have also rejected suggestions that Louisiana’s insurance crisis is the result of burdensome regulations and excessive lawsuits.

Republicans have said the three-year rule has forced insurance companies to raise premiums because it prevents them from managing risk through canceling risky policies. The three-year rule already has exceptions that allow insurance companies to cancel policies that become too risky. Reasons include a “material change in the risk being insured” or if renewing a policy “endangers the solvency of the insurer.”

A third measure signed into law was Senate Bill 295, sponsored by Sen. Heather Cloud, R-Turkey Creek. It allows insurance companies to increase rates without prior approval from the state insurance department.

A fourth bill Landry signed is geared to benefit consumers rather than industry. House Bill 120, sponsored by Rep. Matthew Willard, D-New Orleans, repeals the June 30, 2025, termination date of the state’s fortified roof grant program. The new law keeps the program in place indefinitely, though it is only effective if lawmakers decide to fund it.

Housing Louisiana praised senators for approving Senate Bill 484, by Sen. Royce Duplessis, D-New Orleans. It would expand the Fortify Homes Program to cover any kind of roof upgrade — and require Temple to guarantee that insurance companies will premium provide discounts for such improvements. The bill awaits House consideration.

“Despite Governor Landry and Insurance Commissioner Tim Temple posting a ‘mission accomplished’ sign, we’re grateful the Louisiana Senate recognized that something needed to be done to deliver actual relief to the people of our state,” Andreanecia Morris, president of Housing Louisiana, said. “By unanimously passing SB 484, our senators proved they understand the insurance crisis needs to be fixed for the people, not for the insurance company’s profits. We expect our house lawmakers to also side with the people over insurance companies.”

Greg LaRose contributed to this report.

Correction: Although Insurance Commissioner Tim Temple has said the changes will open up the market to more competition and should lead to lower homeowner insurance premiums, he has refused to make any promises regarding rate prices. A previous version of this article made Temple’s statements on the matter sound more definitive than they actually were.