It’s time for property insurers to adapt again in Louisiana | Adams & Rees LLP

After Louisianans endured two back-to-back 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 bills regarding remedial claims went into effect: Senate Bill 198 and Senate Bill 214. Both bills have the potential to affect how insurers handle the adjustment of property insurance claims in the state.

Senate Bill 198: Designating an adjuster as an insured’s “primary contact.”

Among other things, Senate Bill 198 created a new law that imposes several requirements on insurers when assigning multiple claim adjusters to a personal home insurance claim resulting from a “named storm or hurricane that has been declared an emergency or disaster.” . These additional requirements only apply where the insurer changes the adjuster who is “principally responsible” for the claim three or more times within a six-month period. In these circumstances, the new law requires the insurer to provide the following to the insured:

  • A written status report that includes appropriate information about: (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 the payments were made; and (5) items currently known to the insurer but for which the insured must provide additional information to complete the adjustment process;
  • Primary contact until the insurer closes the claim or a party files a lawsuit on the claim; and
  • Two or more direct means of communication with the primary contact.

The insurer’s designation of one adjuster as the “primary contact” on the claim does not preclude other claims personnel from working on portions of the insured’s claim. Regardless, it was clear that the Legislature’s intent behind Senate Bill 198 was to ensure that policyholders have a consistent point of contact throughout the life of a claim.

Although the new statute has no penalty provision, an insured may argue that a violation of the statute gives rise to a claim for malpractice in processing and adjusting the claim. In such cases, one can certainly predict that the plaintiff (insured) will issue discovery to the defendant (insurer) demanding the identity of all adjusters who participated in the claim. Thus, a best practice for insurers after a named storm may be for the original adjuster to serve as the “primary contact” for a claim. The primary contact may pass details on file from other providers or regulators, as well as provide contact information to other regulators.

Senate Bill 214: All adjusters must appear and testify in Louisiana in cases arising from insurance claims they adjusted in that state

Senate Bill 214 amended the process for obtaining testimony from foreign witnesses by creating an exception for foreign claim adjusters who adjust a Louisiana insurance claim in two interrelated ways:

  • The new law requires foreign claim adjusters to be available for depositions by phone or video teleconference in cases arising from the claim they adjusted in Louisiana, but limits the admissibility of the adjuster’s testimony at trial.
  • Accordingly, the new law requires foreign claims adjusters to appear and testify at trial.

Senate Bill 214 essentially places the burden on insurers to provide their assigned claims adjusters to testify at trial in Louisiana, regardless of their state of residence. As a result, insurers should carefully evaluate their processes for appointing adjusters for claims filed in Louisiana and consider the costs associated with selecting foreign adjusters to process these claims.