It’s time for property insurance companies to readjust in Louisiana | Adams and Reese LLP
After Louisiana citizens endured two consecutive prolific hurricane seasons in 2020 and 2021, state lawmakers made adjusting property insurance claims a top priority during this year’s regular legislative session. . On August 1, 2022, two new adjuster bills came into effect: Senate Bill 198 and Senate Bill 214. Both of these bills have the potential to affect how insurers handle the adjustment of property insurance claims in the state.
Senate Bill 198: Designating a Claims Adjuster as the Insured’s “Primary Contact”
Among other things, Senate Bill 198 created a new law that imposes several requirements on insurers when assigning multiple adjusters to a personal home insurance claim following a “storm or ‘a named hurricane for which a state of emergency or disaster is declared’. These additional requirements only apply when the insurer changes the adjuster who is “primarily responsible” for the claim three or more times within a six-month period. In these circumstances, the new law obliges the insurer to provide the insured with:
- A written status report that includes relevant information on: (1) the insured’s deductible; (2) the amounts available under each coverage; (3) the amounts paid under each coverage; (4) when, where and to whom payments were issued; and (5) items currently known to the insurer, but for which the insured must provide additional information to complete the adjustment process;
- A primary contact until the insurer closes the claim or a party takes legal action; and
- Two or more direct means of communication with the primary contact.
The insurer’s designation of a claims adjuster as the “primary contact” for the claim does not preclude other claims personnel from working on portions of the insured’s claim. Nonetheless, it was clear that the intent of the Legislative Assembly behind Senate Bill 198 was to ensure that insureds had a consistent point of contact throughout the duration of the claim.
Although the new law does not contain a penalty provision, an insured can argue that the violation of the law gives rise to a claim for bad faith practices in handling and settling the complaint. In such cases, it is certainly foreseeable that the plaintiff (the insured) will issue a prior communication to the defendant (the insurer) requesting the identity of all experts who participated in the claim. Thus, the best practice for insurers following a named storm may be to have the initial adjuster serve as the “primary contact” for a claim. The primary contact can forward case details of other providers or adjusters as well as provide contact details for other adjusters.
Senate Bill 214: All adjusters must appear and testify in Louisiana in lawsuits arising from insurance claims they have adjusted in that state
Senate Bill 214 changed the process for obtaining testimony from nonresident witnesses, creating an exception for nonresident adjusters who settle an insurance claim in Louisiana in two interrelated ways:
- New law requires nonresident adjusters to be available for deposition by phone or videoconference in lawsuits arising from claim they adjusted in Louisiana, but limits admissibility of adjuster deposition testimony in claims at trial.
- Similarly, the new law requires non-resident adjusters to appear and testify at trial in the prosecution.
Senate Bill 214 essentially places the responsibility on insurers to make their appointed adjusters available to testify at a trial in Louisiana, regardless of their state of residence. Accordingly, insurers should carefully evaluate their processes for assigning adjusters to claims made in Louisiana and consider the costs associated with selecting non-resident adjusters to handle such claims.