Governor Landry Vetoes Senate Bill 111 Affecting Insurance Claims

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Visual representation of insurance claims and legislative processes.

News Summary

Louisiana Governor Jeff Landry has vetoed Senate Bill 111, which aimed to restrict policyholders’ ability to file lawsuits against insurers for bad faith claims. The veto has ignited discussions among legislators and industry experts regarding its impact on insurance regulations and the resolution of claims. The governor expressed concerns over the bill complicating the claims process, while supporters emphasized its potential to tackle rising insurance costs. With a focus on tort reform this legislative session, attention now shifts to pending bills that could further redefine insurance practices in Louisiana.

BATON ROUGE – Louisiana Governor Jeff Landry has officially vetoed Senate Bill 111, which sought to place restrictions on legal actions that policyholders could take against insurance companies for bad faith claims-handling practices. This decision has sparked considerable discussion among legislators and industry stakeholders about the implications for the state’s insurance landscape.

Senate Bill 111 aimed to limit the conditions under which policyholders could file bad faith lawsuits against their insurers. The proposed legislation intended to bar such lawsuits in situations where there is a good faith dispute regarding liability or the medical cause of an injury. Additionally, the bill sought to prevent bad faith lawsuits if insurers were not provided at least 30 days to respond to a settlement offer that was within policy limits. Furthermore, the bill failed to define the term “adequate discovery,” a gap which raised concerns about potential delays in resolving claims.

In his veto message, Governor Landry indicated that he believes existing bad faith statutes dissuade unnecessary delays in the claims process. He expressed apprehension that the provisions in SB 111 could complicate the process for policyholders attempting to contest claim denials, thereby injecting uncertainty into the legal framework governing such matters. The governor pointed out that the lack of clarity regarding discovery language could lead to indefinite postponements in the resolution of claims.

Insurance Commissioner Tim Temple voiced his disappointment regarding the veto, emphasizing that the bill was a vital measure to tackle legal expenses contributing to rising insurance rates in Louisiana. He stated that the legislation aimed to create a more equitable environment for insurers when defending against lawsuits.

Senator Alan Seabaugh, the bill’s sponsor and a member of Landry’s party, expressed frustration over the veto, feeling as though he had not been fully informed of the governor’s stance prior to the veto. Senate President Cameron Henry also conveyed his disappointment but refrained from expressing any frustration about the nature of the veto process.

Governor Landry has endorsed other legislation this session that aims to modify tort laws, including measures that limit the ability of uninsured drivers to collect damages and new rules concerning injury liability. Among the bills that Landry has signed are House Bill 148, which empowers the insurance commissioner to reject unreasonable rate increases, and House Bill 329, which allocates $5 million annually to the Louisiana Fortify Homes Program designed to assist in establishing hurricane-resistant roofing.

This legislative session has largely been characterized by a focus on “tort reform” aimed at addressing the high insurance premiums attributed to personal injury lawsuits. The recently passed insurance legislation reflects a concerted effort to strike a balance between the needs of insurance companies and the interests of trial lawyers, though skepticism persists among some lawmakers and industry experts regarding the effectiveness of these new laws in actually lowering insurance rates.

With the veto of SB 111, attention now turns to multiple bills that remain pending approval from the governor, which cover a variety of reform measures associated with the insurance industry in Louisiana. The outcomes of these pending bills may further shape the landscape of insurance regulation in the state and influence the overall climate for policyholders and insurers alike.