Bill Targeting Chinese Drywall Advances in Louisiana House

The insurance industry continues to lose its battle against a proposed ban on property insurers dropping or changing coverage because of corrosive Chinese-made drywall.

The proposal will be debated by the full House after getting approval from the House Insurance Committee. The bill (Senate Bill 595) by Sen. Julie Quinn, R-Metairie, already has the unanimous backing of the Senate.

The insurance industry argues the bill would violate existing insurance contracts and could force up insurance rates statewide. Insurance lobbyists said that the bill, if approved, would face certain court challenge because it is retroactive.

An attempt by Rep. Chuck Kleckley, chairman of the House committee, to remove the retroactivity failed in a 6-2 vote against it. The committee then approved the bill without objection. “I don’t have many friends.” Kleckley, R-Lake Charles, joked after the vote.

Quinn’s bill would prohibit property insurers from canceling, refusing to renew, or increasing premiums or deductibles for homes or businesses because of Chinese drywall at a property. The wallboard has been blamed for home corrosion and health concerns.

If approved by lawmakers, the ban would be enacted until July 1, 2013. Any insurer found in violation under the bill would face a penalty up to $15,000, plus all court costs and attorney fees.