NAMIC Praises La. Lawmakers for Adjustments to Residual Market Rating Formulas
Louisiana lawmakers should be commended for adjustments they have made in the rating formulas used to calculate rates for the state’s residual markets, according to an official of the National Association of Mutual Insurance Companies.
State Affairs Manager David Reddick said the changes outlined in House Bill 319 should help to ensure that the rates of the Louisiana Citizens Property Insurance Corporation are not competitive with rates charged in the voluntary market.
Going forward, HB 319 contemplates that the rates for the Coastal and FAIR plans shall exceed by at least 10 percent the rates of the top 10 insurers in each parish (county) as opposed to present law, which bases the rates on statewide rates of the top 10 insurers.
Similarly, residual market rates for mobile home policies shall now be based on the top five insurers writing such policies in each parish as opposed to the entire state. The new law also states that rates charged in a particular parish shall exceed by at least 10 percent the rates of any insurer that has a minimum of three percent of the total premium for each parish.
Reddick also noted that lawmakers took action on two building code-related issues before adjourning on Thursday. Legislators approved House Resolution 135 which calls for creation of a 27-member Uniform Building Code Task Force, under the direction of the Commissioner of Insurance, to study current laws and regulations related to the construction of buildings and structures throughout the state and to make recommendations regarding legislation. The Task Force is charged with presenting a report to the governor and legislature no later than March 1, 2006. House Bill 552 makes several changes to the Commercial Building Energy Conservation Code.
Other enacted bills of note include:
–House Bill 509, which prohibits citations for failing to wear a seatbelt or a motorcycle helmet from appearing on an individual’s operating record;
–House Bill 692, which requires that an ignition interlock device be placed on an individual’s vehicle as a condition of bail in certain alcohol-related driving offenses;
–House Bill 761, which allows air bags to be calculated to determine if a vehicle is a total loss under the insurance policy if the policyholder agrees; and
–Senate Bill 205, a “Database Security Breach Notification Law” similar to others enacted around the country this year. The new law is scheduled to take effect on Jan. 1, 2006.
Under Louisiana law, Gov. Kathleen Blanco has 10 days from receipt of a bill to either sign or veto it or the bill becomes law without her signature.
A list of enacted legislation is available on NAMIC’s Website, NAMIC Online at
http://www.namic.org/stateLaws/05louisiana.asp.