Triple-I Weblog | Louisiana Insurance coverage Regulator IssuesCease & Desist Orderto Texas Regulation Agency

Louisiana Insurance coverage Commissioner Jim Donelon final week issued a cease-and-desist order towards a Houston-based regulation agency, accusing it of fraud that will have affected lots of of hurricane-related claims in his state.

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“The dimensions and scope of McClenny, Moseley & Associates’ unlawful insurance coverage scheme is in contrast to something I’ve seen earlier than,” Donelon stated in a press launch. “It’s uncommon for the division to situation regulatory motion towards firms that we don’t regulate, however on this case the order is important to guard policyholders from the corporate’s fraudulent insurance coverage actions.”

The regulation agency filed greater than 1,500 lawsuits in Louisiana over a three-month interval final yr, in response to Donelon.

The property insurance coverage market in Louisiana has deteriorated since document hurricane exercise hit the state in 2020 and 2021, leading to 11 insurers providing householders insurance coverage in Louisiana being declared bancrupt between July 2021 and September 2022. Insurers have paid out greater than $23 billion in insured losses from over 800,000 claims filed within the two years of extreme hurricane exercise. The biggest property injury occasions had been Hurricane Laura (2020) and Hurricane Ida (2021).

The mounting losses haven’t solely fueled insurer bankruptcies, but in addition resulted in a dozen insurers pulling out of the market and greater than 50 stopping new enterprise in hurricane-prone communities.

Louisiana’s issues are just like these of one other coastal state, Florida, however there are vital variations. Florida’s issues stem largely from many years of abuse and fraud within the authorized system, whereas Louisiana’s issues have extra to do with insurers being underfunded and never having sufficient reinsurance safety to resist claims made through the record-breaking hurricane seasons of 2020 and 2021 have arisen. Generally , insurers in Louisiana haven’t skilled the extent of extreme litigation that insurers in Florida have confronted.

“It now seems that some litigators try to take a web page out of the Florida playbook by participating in property insurer litigation in Louisiana,” stated Mark Friedlander, Triple-I’s director of company communications. “We commend Commissioner Donelon for swiftly addressing these fraudulent practices.”

In keeping with a report by the Occasions Picayune/New Orleans Advocate, an investigation by the Louisiana Division of Insurance coverage discovered the Houston-based firm was concerned in insurance coverage fraud and unfair commerce practices by Alabama-based Apex Roofing and Restoration and confronted allegations of probably prison conduct courts throughout the nation. In a single such case, the newspaper reported, a girl testified that she by no means supposed to maintain the regulation agency when she employed the roofing firm to restore her hurricane-damaged roof.

“The corporate instructed their insurance coverage firm that they represented them and even filed a lawsuit on their behalf, though they stated they had been unaware,” the newspaper stated.

Abuse of the authorized system is a pervasive downside that contributes to greater prices for insurers and policyholders throughout the nation, in addition to rising prices typically given the significance of insurance coverage in growth and commerce. Triple-I is dedicated to informing the dialogue on this important situation.

Be taught extra:

Hurricanes trigger insurance coverage losses and insurer bankruptcies in Louisiana

Florida insurance coverage disaster reforms are gaining momentum with the most recent proposal

Florida auto laws following 2022 reforms suggests the state is critical about fixing the insurance coverage disaster

Florida and the abuses of the authorized system highlighted at JIF 2022

IRC examine: The general public perceives the impression of litigation on auto insurance coverage claims

A piecemeal strategy to transparency in litigation funding

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2023-02-21 15:49:46

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