A draft order released by Louisiana’s insurance commissioner Wednesday would significantly restrict the ability of property and health insurance companies to cancel the policies of Hurricane Katrina victims in that state.
The order, which is not expected to be finalized until late next week as to allow insurers time to respond, says policy provisions that require premium payments will be suspended retroactive to Aug. 26, when Louisiana declared a state of emergency.
It also says that any cancellation notice issued after Aug. 26 for a policy that was in effect on that day will be void. The order says the notices should be reissued once the state of emergency is lifted. Currently, that would be Sept. 25, but the date could be extended.
The draft order was presented at an emergency summit of insurance commissioners from the hurricane-damaged Gulf Coast states and nearly 300 insurance company officials who write policies in their states.
The officials gathered at an Atlanta airport hotel to discuss how to deal with an expected deluge of insurance claims related to Katrina. Louisiana Insurance Commissioner J. Robert Wooley estimated the insured losses in his state alone at $19 billion. The Florida insurance commissioner estimated the total economic impact from the hurricane at up to $150 billion.
“You, as an industry at this point in time, will need to be a leader, and you will be judged by how you respond,” Alabama Insurance Commissioner Walter Bell told those at the meeting.
Bell told the group it may need to look at how to help people that don’t have flood insurance. He noted that many residents in Mobile whose homes were destroyed by flooding were not in a designated flood plain and therefore may not have had flood insurance.
“People in this room have an incredible opportunity to be a very proactive force in the recovery of this area, because that’s the next phase,” Wooley told the group. “We need your help. I think this industry is going to be watched, just like the rescue effort was watched.”
Wooley was referring to criticism that the federal government did not move quick enough to help evacuate people from hurricane-ravaged New Orleans. On that point, however, Wooley said the criticism was unfair.
“I am appalled at the finger-pointing that is going on in the national media about what has happened,” he said. “You know what? It’s easy to win the Super Bowl on Monday, but when you’re in the game, things move at a different speed.”
Besides property damage, the Louisiana insurance commissioner’s order also would place restrictions on health insurance companies who do business in seven Louisiana parishes affected by the hurricane. The parishes are Jefferson, Orleans, Plaquemines, St. Bernard, St. Tammany, Tangipahoa and Washington.
Specifically, the draft order says that all cancellation and termination provisions are suspended during the state of emergency. It also says that all insurers with policy holders in the seven parishes shall waive any and all restrictions relative to out-of-network access to health care services, and that all health insurance issuers shall reimburse at the highest possible rate to minimize people’s out-of-pocket expenses.
The order related to property insurance companies and health insurance companies also would put in place provisions designed to speed up the claims process.