Louisiana appears headed in a new direction when it comes to insurance regulations.
After 17 years in office, incumbent Insurance Commissioner Jim Donelon will step down at the beginning of 2024. He will be replaced by fellow Republican Tim Temple, the former owner of a family insurance business who ran unopposed for the position.
Temple plans to lean heavily into a “free market” approach to managing the state’s insurance industry, one that involves less regulation and rules. He believes those restrictions have prevented more insurance companies from doing business in Louisiana. If they were lifted, he said, the number of companies willing to write policies would increase, and insurance rates would decrease.
“Insurance companies do not have to do business in the state of Louisiana,” Temple says. “They chose to do business in the state of Louisiana.”
But to many, including Donelon, the changes Temple wants to make could soften consumer protections.
Traditionally, proposals like Temple’s also struggle to gain approval from the Louisiana Legislature, in spite of major pushes from the insurance industry.
Temple wants to weaken what’s known as the three-year rule, a law unique to Louisiana that makes it very difficult for an insurance company to drop a client if the insurer has written the client’s insurance policy for three years.
Temple says the law is problematic because it “marries the insurance company with the consumer and doesn’t allow the insurance company to get divorced. It doesn’t allow the company to manage their risk.”
“Why would an insurance company want to come and do that?” he asks.
By contrast, Donelon was supportive of this provision, characterizing it as a consumer protection measure. In an interview with The Times-Picayune, Donelon says the three-year rule prevents insurers from dropping large numbers of policy holders following a natural disaster.
A bill that would have watered down the three-year rule also failed early on in the state legislative process this year. The legislation, sponsored by Rep. Francis Thompson, R-Delhi, was rejected on the House floor 56-39, failing to advance to the Senate.
Temple said he supports efforts to amend the state’s “bad faith” law that makes it easier for property owners to sue their insurance companies when they encounter problems with their claims. Clients successful in their lawsuits can receive up to 50% more money in legal damages than the amount they were supposed to be paid for the insurance claim, plus extra funding to cover their attorneys’ fees.
The Louisiana Association of Business and Industry has also pushed an overhaul, saying the bad faith clause makes it too expensive to do business in the state. Temple agrees that it deters insurance companies from writing policies in Louisiana. Read the full story about Temple’s plans from Louisiana Illuminator.
