BATON ROUGE, La. -- Louisiana Citizens Property Insurance Corp. will push for a new law protecting it from being penalized for paying claims too slowly.
Such a law could remove a major incentive for class-action lawsuits, such as the ones that were filed against the property insurer of last resort following hurricanes Katrina and Rita.
Last year, a state district judge in Gretna ordered Citizens to pay $92.8 million to 15,573 policyholders whose Katrina claims were not adjusted within the time period required by state law.
The current law calls for a penalty of $5,000 per claim. Citizens general counsel, Suzanne Dondeville, told the insurer's governing board Thursday that eliminating the penalty would mean lower fees for plaintiff attorneys, giving them less reason to file class actions.
Citizens CEO John Wortman said Rep. Patrick Connick, R-Harvey, has agreed to push the bill. The bill will offer Citizens the same kind of protection afforded the Louisiana Insurance Guaranty Association, which pays the claims of failed insurers, Wortman said.
Insurance Commissioner Jim Donelon said penalizing the state-backed Citizens forces taxpayers to bear an unnecessary burden. No other insurer was adjusting claims in a timely fashion after Katrina, Donelon said.
Citizens also hopes to make changes to the state's open meetings law, which does not allow audits to be discussed in sessions closed to the public, Wortman said. At the same time, the Legislative Auditor's Office says its audit results are confidential until released.
"So what it does is it precludes the board from looking at and discussing anything on audits until after they're public," Wortman said. "And we think we should have the opportunity to review audits with the board and committees prior to making them public."
Board member Jim Napper said Citizens should be careful about trying to amend the open meetings law.
"You will get beat up on the public meetings law," he said. "I think it's a mistake."
Citizens spent months arguing with the legislative auditor over its 2008 audit results, as well as the $480,000 bill for the audit. The board voted Thursday to allow its audit committee to discuss lowering the bill with the auditor.
The auditor released the final version of the 2008 report in January. The review criticized the insurer for allowing too many people access to computer records and criticized accounting records and information systems. Citizens officials said most of the problems had already been fixed or that recommended changes were being implemented.
(Copyright 2010 by The Associated Press. All Rights Reserved.)
