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AUGUST 2024
IIABL STAFF
Benjamin Albright
Chief Executive Officer, President balbright@iiabl.com (225) 236-1357
Jeff Albright
Consultant
jalbright@iiabl.com (225) 236-1366
Karen Kuylen
Director of Accounting & Finance kkuylen@iiabl.com (225) 236-1353
Jamie Newchurch
Director of Insurance Programs jnewchurch@iiabl.com (225) 236-1350
Kathleen O'Regan
Director of Communications & Events koregan@iiabl.com (225) 236-1360
Karson Roberts
Communications & Events Administrator kroberts@iiabl.com (225) 236-1351
Lyra Roberts
E&O Administrator lyra.roberts@iiaba.net (225) 236-1352
TA359-2024Changesto UMSelectionForms
This article discusses Technical Advisory 359, explaining the 2024 changes to UM selection forms from the Louisiana Legislative session
JEFFALBRIGHT IIABLCONSULTANT
The Louisiana Department of Insurance (LDI) recently issued LDI Bulletin 2024-02 (Uninsured/Underinsured Motorist Bodily Injury Coverage Form For Commercial Automobile Insurance Policies Only).
LDI Bulletin 2024-02 highlights one of several changes made to the UM statutes during the 2024 Regular Session of the Louisiana Legislature
TA 359 will outline these various changes to the uninsured motorist (UM) statutes
LDI Bulletin 2024-02 – UMBI Coverage for Commercial Autos
Act 770 of the 2024 Regular Session of the Louisiana Legislature, eliminated the requirement to sign an uninsured motorist (UM) selection form to reduce UM limits or reject UM coverage on commercial automobile insurance (Please note that the UM selection form is still required for personal automobile insurance ) Commercial automobile insurance policyholders can now select UM coverage if they want to buy it, and do not need to do anything to reject UM coverage. However, Act 770specifies that:
“…for commercial automobile insurance policies, the insured shall have the option of selecting uninsured motorist coverage on a form promulgated by the commissioner. If there is no selection of uninsured motorist coverage on the form provided to the insured and no payment of premium that includes this coverage, then it shall be presumed that no uninsured motorist coverage was selected for that policy or contract, and the provisions of this Section shall not apply.”
TECHNICALADVISORY
LDI Bulletin 2024-02 advises all property & casualty insurance companies that LDI is in the process of promulgating a new form to comply with this new requirement in the law, but since the Administrative Procedures Act requires a lengthy process of promulgation, and the law became effective August 1, 2024, insurers are instructed to use the existing UM selection form until the new form is published by LDI. You can find the form along with LDI Bulletin 2024-02.
New Rebuttable Presumption That UM Selection Form is Valid
Louisiana courts have repeatedly found UM selection forms invalid for a host of minor technical reasons, forcing insurers to pay UM claims when premiums were never paid, and creating significant E&O liability claims for insurance agents. IIABL and others have repeatedly changed the UM statutes and the UM selection form over the years to reduce or eliminate these technical challenges.
A second provision of Act 770 of the 2024 Regular Session of the Louisiana Legislature adds a new provision to limit the ability of the courts to invalidate UM selection forms:
“If the form is signed but not properly completed, such that the rebuttable presumption does not apply, there shall be no uninsured motorist coverage or modified uninsured motorist coverage as applicable if it is
TECHNICALADVISORY
IIABL Bill Requires Insurers to Validate & Maintain UM Forms
Ben Albright
December 2023
IIABL asked Representative “Big” John Illg to introduce HB 511 in the 2024 Regular Session of the Louisiana Legislature to protect IIABL members from some aggressive tactics by a few insurance companies. The bill became law as Act 381 and will become law on April 1, 2025.
Agents have always been responsible for obtaining UM selection forms from policyholders. But over the years, some insurers have pushed 100% of the responsibility for UM selection forms onto agents. Under Louisiana law, the UM selection form become part of the policy, whether or not it is attached to policy delivered to the policyholder. Whether UM coverage exists or not is 100% dependent upon the UM selection form. Some insurers stopped reviewing and validating UM selection forms or maintaining a copy of the UM selection form for their records. Instead, these insurers would require the agent to produce a UM selection form at the time of an accident, many years after a policy is written. If the agent cannot produce the form, or the form has a technical mistake which may make the form invalid, and the insurer is forced to pay a UM claim, some insurers then subrogated against the agent to recover the UM payment. IIABL believes that it should be the responsibility of the insurance company to validate and maintain a copy of the UM selection form that is part of their policy contract with the policyholder. It is inappropriate to force this responsibility on the agent.
Act 381 eliminates this problem for agents. The new law provides that:
“An insurer may require the producer of record to obtain a completed selection form and deliver the form to the insurer; however, the insurer shall verify that the form is properly completed, retain a copy of the form as part of the policy, and shall not delegate this obligation to retain a properly completed form to the producer of record.”
If you have any questions about this Technical Advisory, or need additional information, please contact Benjamin or Jeff Albright at IIABL.
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IIABL’sAnnual MarketplaceReport
This article discusses IIABL’s annual marketplace report, highlighting trends in auto and homeowners premiums, with independent agents increasing their market share.
BENALBRIGHT IIABLCEO&PRESIDENT
IIABL’s annual marketplace report has just been released.
This can be a powerful tool for your agency in explaining to clients what is happening in the broader marketplace: why, for instance, is their commercial auto policy still increasing. The answers are in this report.
Similarly, this can be valuable in your discussions with carriers to understand how your agency and their company fit into the broader marketplace.
Below are 4 interesting takeaways from this year’s report, as a teaser:
1.Independent agents are writing a greater percentage of the total Homeowners premium written in the state, increasing from 47% to 52% in 2023.
2.Private passenger auto premiums grew 10% year over year. Homeowners premium grew 22%.
3. Premium growth in personal auto caught up with rising loss costs this year. Insurers averaged a 91% combined ratio, which MIGHT foretell a slowdown in premium increases for personal auto. Commercial auto, conversely, had an average of 117% combined ratio, despite continued premium growth. Agents should expect those premiums to continue to increase rapidly.
4. Surplus lines growth has slowed as a percentage of total written premiums. This indicates that the admitted market has, at least to some extent, stabilized and provided the necessary capacity.
The full report can be found on IIABL’s website. I encourage you to see the full report and understand how the carriers you represent fit into the broader market.
Highlightsfromthe2024 YoungAgentsConference
We had an absolute BLAST at the 2024 Young Agents Conference with IIAM! The lineup of speakers was nothing short of amazing, featuring Ernie Harker, William Harwood, Amanda Schroeder, and Ben Albright, who delivered valuable insights on effective leadership skills, brand improvement, navigating difficult conversations, AI strategies, relationship management, and trending endorsements. A major highlight was the E&O Mock Trial: Bushwood Country Club v. Danny Noonan’s No Risk Insurance Agency, where our agents showed off their acting skills and even snagged some Oscars!
From our lively exhibit hall to the fun cocktail receptions, every moment was filled with learning, networking, and laughter. We can’t wait to see you all next year to do it all over again!
FloodInsuranceCostsRising
This article discusses the rising costs of NFIP flood insurance, particularly for coastal Louisianans, and efforts by Senator Cassidy to address affordability
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JIMBEAM RETIREDEDITOROFTHE AMERICANPRESS
The cost of my National Flood Insurance Program (NFIP) coverage has doubled over the last six years. However, it’s still affordable. Unfortunately, the same thing can’t be said for homeowners who live closer to the coast in Louisiana and in other states.
The city notified me some years ago that my home was no longer in a high-risk flood zone, but I have continued to buy flood insurance. The annual cost was $450 in 2018 and it has gone up to $971 this year.
My wife and I bought our home for $85,000 in 1982 and its replacement cost is now $286,000 for the building and $215,000 for personal property.
Many Louisianans who live closer to the coast have much higher home replacement costs and some of them are having to drop their flood insurance coverage because of increasing costs.
Members of the state’s congressional delegation have been strong advocates for reducing the cost of NFIP, but it has become a tough sell in Congress.
U.S. Sen. Bill Cassidy, R-Baton Rouge, is perhaps our strongest advocate. In an April 16 speech to the Senate, he demanded that Congress keep flood insurance affordable.
Cassidy met with Louisiana Realtors at a June roundtable. The Realtors discussed their concerns about the rising cost of flood insurance in Louisiana, saying it is one of the top barriers to home ownership in the state.
During a Senate Banking Committee hearing, Cassidy told members of the committee that FEMA’s Risk Rating 2.0 program is causing the cost of some policies to rise by over 1,000%. Policyholders are dropping their coverage because flood insurance is higher than their mortgage payments.
FLOODINSURANCE
Continued from page 17
In another Senate speech in June, Cassidy shared some individual Louisiana stories on flood insurance He also appealed to his fellow senators for help
“I urge my colleagues to come talk to me about NFIP reauthorization and reform,” Cassidy said “We are working on bipartisan legislation that fixes this mess, makes Risk Rating 2 0 transparent, and makes flood insurance affordable again Let’s discuss a way forward ”
Cassidy said a resident in Larose switched from NFIP to private insurance that costs $2,200 dollars a year, which isn’t cheap either However, if he had stayed with NFIP the cost would have been between $4,500 and $5,000, and that was two years ago And his house is six feet above sea level and his property has never flooded.
NFIP ignores a home’s height, Cassidy said, because the program groups homes by zone instead of by elevation.
A retired couple living on Bayou Lafourche near Raceland dropped their NFIP policy because their premiums were rising from $500 to $2,400 annually. Their son who lives just down the road from them in Raceland has seen his flood insurance increase from $500 to $6,300.
FLOODINSURANCE
Continued from page 18
Cassidy said a Korean war veteran and his wife both in their 80s took out a reverse mortgage on their home several years ago to help pay medical bills. They live behind a 12-foot levee, but their reverse mortgage required them to carry flood insurance.
That NFIP coverage is costing them $6,500 a year and that’s on top of what they pay for homeowner’s insurance. Cassidy said if their flood insurance continues to rise, they will need to give up their home.
Flooding is devastating families across the country, he said, “and in states that don’t typically make you think ‘flooding.’” He said Alabama, California, Florida, Louisiana, Mississippi, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas and Virginia are all states that have had more than $1 billion in NFIP claims since 1978.
Cassidy said, “FEMA itself forecasted that over 20% of policyholders would leave the program within 10 years. We are setting the program up for collapse. Congress needs to do something before it’s too late.”
The NFIP was established in 1968 to help those living in flood-prone areas and news reports have continually said it has never been on a sound financial footing. All Congress has been doing is constantly renewing, not reforming, the program.
FEMA defends its new program, and why Congress continues to resist reforming the system is difficult to understand. As Cassidy said, over one-fourth of the states in this country have experienced major flooding problems.
In-ForceFloodInsurance DeclinesasMoreMoveto RiskyAreas
This article discusses the decline in flood insurance coverage along the East Coast, despite population growth in high-risk areas.
WILLJONES IAEDITORIN CHIEF
A week after Hurricane Debby drenched the East Coast, data from Neptune Flood shows that in-force flood insurance policies along the Eastern Seaboard are declining. Meanwhile, thousands more people are moving in rather than out of fire- and floodprone areas, according to a new report from real estate company Redfin that used U.S. Census data.
Florida has seen the most significant population increase in high-risk counties. Despite this, the number of flood insurance policies in Florida remains low. Only 12% of the state's 8.97 million properties have flood insurance, with a modest 1.2% increase in coverage from June 2023 to June 2024, according to Neptune Flood. This brings the total number of policies to 1,089,386, up from 1,076,596 the previous year.
However, the situation is more concerning in other states along the East Coast. Georgia, for instance, saw a 3.7% decrease in flood insurance policies, with only 1.6% of its 4.2 million properties covered. South Carolina experienced a 3.1% decrease, leaving just 6.5% of its 2.1 million properties insured against floods. North Carolina also saw a decline, with a 2.5% drop in policies, covering only 2.6% of its 4.3 million properties.
Further north, states like Pennsylvania, New York, New Jersey and Connecticut have also seen reductions in flood insurance coverage. Pennsylvania saw a 3.9% decrease in policies, leaving only 0.7% of its 5.5 million properties insured. New York and New Jersey experienced declines of 1.3% and 2.2%, respectively, with coverage rates of 1.7% and 3.8%. Connecticut reported a 1.1% decrease, with only 1.6% of its properties covered.
FLOODINSURANCE
“The number of flood insurance policies nationwide is declining for two primary reasons," explained Trevor Burgess, CEO of Neptune Flood. “First, the NFIP's new pricing structure eliminates subsidies for new policies and gradually phases them out for grandfathered renewal policies. Faced with annual price increases of up to 18%, many consumers are opting to drop non-mandatory coverage."
“Second, over the past decade, a large number of Americans have purchased their homes with cash," Burgess said. “These buyers are not required to buy flood insurance, even if they live in high-risk zones, because they don't have a mortgage."
Despite these declining policy numbers, high-risk counties, particularly in Texas and Florida, continue to attract new residents. In 2023, 16,144 more people moved into America's high-flood-risk counties than out, with over half of these moves occurring in Florida.
Further, five high-flood-risk counties in Texas had net inflows of more than 2,000 people in 2023. All are just outside of Houston, which last month grappled with flooding and power outages due to Hurricane Beryl.
“For a lot of Americans, things like cost of living and proximity to family take precedence over catastrophe risk, which can feel less immediate and more abstract," said Elijah de la Campa, senior economist at Redfin.
FLOODINSURANCE
“Florida and Texas, the two states with the highest net inbound migration, both offer low taxes and abundant sunshine, but also feature long, hurricane-prone coastlines," Burgess agrees. Insurers and reinsurers' losses from Hurricane Debby are expected to be in the low single-digit billions of dollars, according to Reuters. This figure would be "very manageable" for the industry, according to a report from Gallagher Re.
Wind and water-related losses could cost insurers between $1 billion to $2 billion. Fewer active insurance policies were partly why the losses would be so low, Gallagher Re's report said.
“There is a real opportunity for independent agents to help counter the decline in flood insurance coverage by consistently discussing flood insurance with home and business owners," Burgess adds. “Many consumers don't realize that they need to purchase a separate flood insurance policy, and some are unaware that private flood insurers can often save them money or provide better protection with higher limits or optional coverages not available through the NFIP."
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IIABL
IIABL 2024-2025
BOARD OF DIRECTORS & OFFICERS
CHAIRMAN, BRET HUGHES
CHAIRMAN-ELECT, ROSS HENRY
SECRETARY-TREASURER, JOE KING MONTGOMERY
NATIONAL DIRECTOR, JOHNNY BECKMANN, III
PAST CHAIRMAN, ARMOND K. SCHWING
YOUNG AGENT REP, MAGGIE LANDRY
Hughes Insurance Services, Inc - Gonzales
Henry Insurance Service, Inc. - Baton Rouge
McGriff Insurance Services - Monroe
Assured Partners - Metairie
Schwing Insurance Agency, Inc. - New Iberia
Perkins-McKenzie Insurance Agency - Baton Rouge
ANN BODKIN-SMITH
MATTHEW DEBLANC
CHRISTY DESOTO
DOMINIQUE DICARLO CROUCH
ROB W. EPPERS
MATT GRAHAM
CHRISTOPHER S. HAIK
STUART HARRIS
BEAU HEAROD
CHARLES H. LEBLANC
CRAIG MARTEL
LYDIA MCMORRIS
A. EUGENE MONTGOMERY, III
HARTWIG "ROBBY" MOSS, IV
SETH OSTENDORFF
ROBERT LOUIS PALMER, JR.
RANDY PERISE
ROBERT STONE
Thomson Smith & Leach Insurance Group - Lafayette
Continental Insurance Services - Marrero
1st Insurance of Marksville - Marksville
Riverlands Insurance Agency - LaPlace
Risk Services of Louisiana - Alexandria
Lincoln Agency - Ruston
Higginbotham Insurance - Lafayette
McClure, Bomar & Harris, LLC - Shreveport
Jeff Davis Insurance - Jennings
Bourg Insurance Agency, Inc - Donaldsonville
Insurance Unlimited of LA, LLC - Lake Charles
Alliant Insurance Services - Baton Rouge
Community Financial Insurance Center, LLC - Monroe
Hartwig Moss Insurance - New Orleans
Dethloff & Associates - Shreveport
Insurance Underwriters, Ltd - Metairie
Blumberg and Associates - Ponchatoula
Stone Insurance, Inc. - Metairie