The following from Advisen FPN, according to A.M. Best Company, Inc.,
Amendments Clear Passage of Louisiana Tainted Drywall Bill
The Louisiana House of Representatives unanimously passed a bill aimed at protecting homeowners affected by a rash of defective drywall after the inclusion of amendments that made the legislation palatable to insurers.
The bill would still bar insurers from canceling or not renewing a policy for a homeowner who filed a claim based on the presence of the tainted drywall, much of it manufactured in China. However, under the changes adopted by the House in a 95-0 vote, S.B. 595 would no longer bar insurers from increasing the premiums on those policies. Companies would also be permitted to end a policy if factors other than the drywall are also present, said Greg LaCost, assistant vice president of state government affairs for the Property Casualty Insurers Association of America.
"If you have Chinese drywall and you also have holes in your roof and the foundation is collapsing, you can nonrenew or cancel for that," he said.
The amendments cut the fine for a violation to $15,000 and specified that the bill will only apply to residential properties. Insurers are also pleased by a provision that would sunset the legislation on July 1, 2013.
"The amendments are good," LaCost said. He described the Senate-passed version of the bill as "undoable." The House version must be adopted in the Senate or the two must be reconciled in conference.
Attempts to reach the bill's sponsor, state Sen. Julie Quinn, R-Metairie, for comment were unsuccessful.
Last year, Louisiana Insurance Commissioner Jim Donelon said the state's insurers will not be able to cancel policies related to tainted drywall manufactured overseas if the policyholder has been with the insurer for more than three years. He also said companies will also not be allowed to raise premiums for customers who report the drywall, which is said to emit elevated levels of sulfur and strontium. Property owners have found the drywall causes metal corrosion in copper pipe, heating and air conditioning units, electrical wiring and health effects (BestWire, April 29, 2010).
The state's last resort insurer, Louisiana Citizens Property Insurance Corp., now provides what Donelon has called a "bare bones" policy to meet the requirements of lenders when a homeowner needs to vacate a house. LaCost called this an example of the industry handling the problem without new laws.
The top writers of homeowners multiperil in Louisiana in 2009, based on direct premiums written, were State Farm Group, with a 28.0% market share; Allstate Insurance Group, with 14.1%; Louisiana Citizens Property Insurance Corp., with 6.4%; Liberty Mutual Insurance Cos., with 6.2%; and Louisiana Farm Bureau Mutual Insurance Co., with 5.7%, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.
(By Sean P. Carr, Washington Correspondent: sean.carr@ambest.com)
(c) 2010 A.M. Best Company, Inc
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