Louisiana Regulators Propose Immunity Legislation for Citizens

In a briefing session to introduce a package of bills supported by the Louisiana Department of Insurance for the upcoming legislative session, Insurance Commissioner Jim Donelon described the state’s insurance market as being in “good shape” and said the department’s “approach to this session is one of defense more than offense.”

For the most part, the property and casualty related measures being sought by the department were described as “clean up” bills. However, one measure that could face opposition is legislation outlined by Warren Byrd, executive counsel for the department, which seeks immunity from certain lawsuits for Citizens Property Insurance Corp., the state’s property insurer of last resort.

Byrd said when it comes to immunity provisions, “our existing Citizens law not as clear as it needed to be.” He said the department seeks only to grant immunity to Citizens for its regular operations, not for intentional acts or criminal acts, breach of contract matters regarding insurance coverage, LDOI administrative actions, or for any debts the corporation may assume.

Citizens assessable insurers would not be included in the immunity provisions, Byrd said.

Donelon said last September that he would support legislation to protect Citizens against lawsuits – past and present. The law would negate the $95 million award handed down in a class-action lawsuit last year against Citizens for late payment of claims after Hurricanes Katrina and Rita in 2005. Other state backed insurance entities, such as the Louisiana Insurance Guaranty Association, are immune from certain lawsuits, Byrd said.

He said another aspect of the proposal would be to include Citizens under the umbrella of entities connected to the insurance department that are not required to post an appeal bond. Byrd said while LIGA is not required to post a bond in the case of an appeal, currently Citizens is required to do so along with other entities, such as the Louisiana Health Plan.

Donelon said in August that a judge had agreed to let Citizens pay $6 million to a group of attorneys in order to go forward with the appeal of the $95 million class action award instead of posting an appeal bond. That case originated in Jefferson Parish and involves more than 18,500 policyholders.

The Associated Press reported that Rep. Patrick Connick, R-Harvey, had agreed to sponsor the immunity bill.

While the insurance department introduced the planned legislation in early March it acknowledged that the bills remain works in progress.

The regular session of the Louisiana Legislature begins March 29.