Louisiana Insurance Commissioner Proposes Fines Against Insurers For Wrongful Hurricane Claims Conduct

Louisiana Insurance Commissioner Jim Donelon has examined the claims conduct of five insurance companies. As a result of these Targeted Market Conduct Examinations, he has proposed substantial fines. The Louisiana Department of Insurance News Release announcing these fines noted in part:

Insurance Commissioner Jim Donelon has proposed fining five homeowners insurance companies a combined $764,750 following targeted market conduct examinations of their insurance activities between August 27, 2020, and June 30, 2021, a period in which hurricanes Laura, Delta and Zeta made landfall in Louisiana.

The five examinations found 44 instances of improper activities and/or business practices that were noncompliant with the Louisiana Insurance Code. Violations were found in the areas of claims handling, complaint handling, and operations and management.

The five companies for which the LDI has proposed fines are United Property & Casualty Insurance Company, GeoVera Specialty Insurance Company, FedNat Insurance Company, Maison Insurance Company and Allied Trust Insurance Company. The LDI retained Risk & Regulatory Consulting, LLC to assist with the examination. All five examination reports were adopted on April 11, 2022.

‘The devastation and impact of the 2020 hurricane season was overwhelming, but that doesn’t excuse the activities we discovered in our market conduct examinations of these five insurers,’ said Commissioner Donelon. ‘I strongly encourage our state’s insurance industry to take note of the unacceptable behavior we found and know we will continue to pursue appropriate fines and regulatory action against any insurer that is not meeting their obligations.’

When I read the results of the examination, I noted that the companies did not agree with all the findings. This is not a finished regulatory process. It is also hard to know how the amounts of the fines were determined from just reading the examinations.

These Market Conduct Examinations are a file review without getting the flavor of the full evidence from the policyholder’s perspective. The examiners are not tracking down the former Cat adjusters and interviewing them. The wrongful claims handling findings primarily concerned delays. These often were caused by multiple adjusters being reassigned to one claim and the new adjuster not following up on communications and payment. I encourage readers of this blog to read at least one of the examinations, which are linked in the release.

I also noted that none of these companies are financially well off. Our firm has litigation against several of them because of underpaid and delayed claims payments. I get worried when insurance companies are financially struggling and wonder whether the delayed and underpaid claims are being caused from those financial stresses.

Thought For The Day

Even very ordinary people, upon closer examination, can often look extraordinary.
—Holly Hunter