Insights

In the wake of Hurricane Ida, the Louisiana Department of Insurance issued Emergency Rule 47, extending certain benefits, entitlements, and protections to insureds affected by the hurricane and its immediate aftermath. Emergency Rule 47 has an effective date of August 26, 2021 at 12:01 a.m. and is set to expire on September 27, 2021 at 11:59 p.m. or at the cessation of Governor John Bel Edwards’ Emergency Proclamation JBE 0221-165, whichever occurs first.

The Emergency Rule covers all types of insurers conducting business in the State of Louisiana and applies to all types of insurance enumerated under the Louisiana Insurance Code, although those insurance types can be broken into two main categories:

1. Any and all kinds of insurance set forth in La. R.S. §22:47, including, but not limited to, life, vehicle, liability, workers’ compensation, burglary and forgery, fidelity, title, fire and allied lines, crop, marine and transportation, homeowners’, credit property and casualty, and industrial fire; and
2. Health and accident Insurance, including but not limited to group and individual health and accident insurance, limited benefit insurance, Medicare supplemental insurance, Medicare select insurance, HMO’s, PPO’s, excess loss insurance, stop loss insurance, disability income insurance, short-term health insurance, long-term care insurance, and any and all other health insurance.

An understanding of the new guidelines set forth by Emergency Rule 47 is important, as any insurer who violates any provision of Emergency Rule 47 is subject to regulatory action by the insurance commissioner under any applicable provisions of the Louisiana Insurance Code.

First, it is important to note that Emergency Rule 47 is not a blanket declaration that will apply statewide to all insureds in Louisiana. It is designed to protect those who were affected by Hurricane Ida and its immediate aftermath. Specifically, it applies to individuals who reside in or own property in one of the following twenty-five (25) parishes:

Ascension, Assumption, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary, St. Tammany, Tangipahoa, Terrebonne, Washington, West Baton Rouge, and West Feliciana.

Additionally, in terms of health and accident insurance, Emergency Rule 47 applies to any person whose primary place of employment was in, or whose permanent employer had assigned said person to a business located in, one of the twenty-five (25) above-listed parishes.

The primary purpose of Emergency Rule 47 appears to be to protect insureds from a cancellation or lapse in their insurance coverage as a result in the wake of Hurricane Ida. To that end, under the Rule, no insurer may issue any notice of cancellation, nonrenewal, or non-reinstatement of any type of insurance policy to any affected insured during the pendency of Rule 47. This includes any notice of cancellation related to nonpayment of premium by the insured. However, Rule 47 does not apply to any insurance policy issued on or after 12:01 a.m. on August 26, 2021.

Additionally, any notice that was previously sent for any policy of insurance that was in full force and effect at 12:01 a.m. on August 26, 2021 is null and void, and must be re-issued after the expiration of the Rule.

There are two exceptions to this moratorium on cancellations on insurance policies. The first is when the insured either requests a cancellation in writing or concurs to a cancellation in writing. The second is when the insured has engaged in fraud or a material misrepresentation. Absent either of these two circumstances, an insurer who attempts to cancel a policy of insurance during the pendency of Rule 47 can be subject to regulatory action by the Louisiana insurance commissioner.

The fact that an insurer cannot cancel a policy of insurance does not, however, relieve an insured of their obligation to pay their insurance premiums. In fact, Emergency Rule 47 specifically notes that unless a policy is cancelled by the insured in writing, all insureds have an obligation to continue paying their premium, and that Rule 47 is to be treated as a grace period to facilitate the payment of their premium, not a waiver of the obligation to pay. Rule 47 further directs insurers to work with insureds who reside in impacted parishes whose payments are due during this moratorium by either: (1) establishing a payment plan for the insured; or (2) providing a further extension of time for payment of the unpaid premium. Rule 47 also prohibits any insurer from imposing any interest, penalty, or other charge against an insured as a result of this premium payment suspension.

If an insurer receives a claim from an insured owing a premium payment, the insurer may offset the premium owed by the insured against the claim being made. It is important to note that this offset does not apply to health and accident insurers.

While the majority of Emergency Rule 47 is focused on the above-listed protections for affected insureds, there is also a section that provides some additional protections for property and casualty insurers as it pertains to loss adjustment of claims.

Under §4743(A) of Rule 47, Hurricane Ida is deemed to be a catastrophic loss event under La. R.S. §22:1892(A)(3) that would normally require insurers to initiate loss adjustment of a property damage claim within thirty (30) days after notification of loss by an insured claimant. However, §4743(B) grants insurers an additional thirty (30) days to initiate loss adjustment given the severity and extent of the destruction caused by Hurricane Ida, providing a total of sixty (60) days to initiate loss adjustment of a property damage claim after notification of loss by an insured claimant.

Please note that this article does not include an exhaustive list of all provisions set forth by Emergency Rule 47, and there are additional provisions of the Rule that pertain to specific issues with health and accident insurance. 

Please contact a Deutsch Kerrigan attorney with any questions you may have.