RS 22:1460 Fire insurance rates; the property insurance association of louisiana
§1460. Fire insurance rates; the Property Insurance Association of Louisiana
A. Every insurance company authorized to write fire insurance in this state shall adhere to the rates promulgated by The Property Insurance Association of Louisiana as provided in this Section, and approved by the commissioner of insurance, except that any such insurer may deviate from such rates in accordance with R.S. 22:1468. Nothing in this Section shall be construed to require adherence to association rates by companies insuring special or particular kinds or classes of risks in connection with which an inspection or engineering service is maintained, provided rates for such risks are filed with the commissioner of insurance through a duly licensed company or through a rating organization licensed under R.S. 22:1466.
B.(1) The Property Insurance Association of Louisiana shall be continued and every insurance company, now or hereafter licensed and authorized to write fire insurance in this state, shall belong to such association.
(2) The board of directors of the association shall be residents of this state and consist of nineteen members, as follows:
(a) One member shall be the commissioner of insurance or his designee.
(b) Three members shall be appointed by the commissioner of insurance, and each appointment shall be subject to confirmation by the Senate.
(c) Repealed by Acts 2007, No. 459, §3, eff. Jan. 1, 2008.
(d) One member shall be a representative designated by the Professional Insurance Agents of Louisiana.
(e) One member shall be a representative designated by the Independent Insurance Agents of Louisiana.
(f) One ex officio member who shall be the chairman of the House Committee on Insurance or a member of that committee designated by him.
(g) One ex officio member who shall be the chairman of the Senate Committee on Insurance or a member of that committee designated by him.
(h) Nine members who shall be elected from and by the membership of the association. These nine members shall be properly apportioned as between stock and nonstock members predicated on the ratio of their net fire insurance premiums for the calendar year immediately preceding said election. Said net fire insurance premiums shall be furnished the association by the commissioner of insurance.
(i) One member shall be a representative designated by the Louisiana Fire Chiefs Association.
(j) One member shall be a representative designated by the Louisiana State Firemen's Association.
(3) Each board member shall be entitled to one vote, except that the legislative members serving pursuant to Subparagraphs (f) and (g) of Paragraph (2) of this Subsection shall be nonvoting members who shall also not be counted for the purposes of a quorum. The officers shall consist of a president, vice president, and secretary-treasurer. The bylaws may provide for such other officers and employees as may be deemed necessary or advisable. The main office of the association shall be in the city of New Orleans, and branch offices may be established throughout this state.
C. The commissioner of insurance shall review the rates promulgated by the association or other rating organization to determine whether they meet the requirements of this Subpart. Such review shall be made in the same manner and subject to the same procedure as is provided in R.S. 22:1464.
D. The powers and duties of the association shall be:
(1) To inspect or cause to be inspected every risk specifically rated by schedule for property damage insurance and to make a written survey of such risk, which shall be filed as a permanent record in the main office of the association. Present inspections and surveys may be used in lieu of new inspections and surveys. Such survey or schedule shall give in detail the defects either of construction or of occupancy, or both, existing in the risk which affect the property damage rate. The rate at which the risk must be written by the members of the association shall be stated in the survey together with the relative measure which each defect bears to the fire hazard as a whole and to the basic cost of the same and the consequent proportionate value of each improvement suggested to minimize the chances of fire so that each assured may be informed as to the manner in which his rate was determined and the measures which should be taken to effect a reduction in the rate and the sum of each reduction. The records of the association shall be exempt from the application of R.S. 44:1 et seq., except that a copy of such survey shall be furnished, upon request, to the owner of every risk, or to any member company or resident agent, provided said company has a policy in effect on the risk, without expense to said owner.
(2) To make rates on fire and allied lines insurance as defined in Paragraph (10) of R.S. 22:47 and on such other coverages as are usually written by fire insurers on property other than motor vehicle insurance located in this state, in accordance with the provisions of this Subpart. However, by and with the approval of the commissioner of insurance, other rating organizations created for the purpose of making and promulgating rates for special or particular kinds or classes of business written by fire insurance companies may be licensed under the terms or conditions of this Subpart.
(3) To audit, on special call by the association, policies written by member companies in compliance with filings as approved or made in accordance with the provisions of this Subpart.
(4) To survey municipal areas for publication of public fire protection grading.
(5) To file fire insurance rating schedules with the commissioner of insurance.
(6) To review building plans and specifications and fire suppression system plans and specifications when submitted to it for review, and to offer nonbinding recommendations for upgrading the fire insurance rating.
(7) To review fire suppression system plans, when submitted to it, and to offer nonbinding recommendations to upgrade fire protection gradings of municipal areas.
(8) To promulgate average rates.
(9) To design and file policy forms with the department.
(10) To perform such functions, to engage in such activities, to employ personnel, consultants, and counsel, and to acquire equipment and facilities adequate to exercise the powers and duties authorized by law in order to encourage and promote programs, legislation, and regulations calculated to produce and maintain a healthy and competitive property insurance market in Louisiana for the benefit of the insuring public.
(11) To consider the addendum and other recommendations of the advisory committee of the board of directors of the Property Insurance Association of Louisiana in accordance with Subsection M of this Section and to make public the current addendum as approved by the board of directors of the Property Insurance Association of Louisiana.
E.(1) Expenses of the association shall be paid by its members and subscribers through assessments levied upon them by the association equitably in proportion to services rendered by the association to the individual member which, insofar as possible, shall be in proportion to the direct premiums, less returned premiums, received in this state by each insurer in the year before the preceding year, provided that any insurer member which has not operated in this state for the two full years next preceding the assessment shall be required to pay a proportionate payment based upon that part of the penultimate year it was operating in this state. Members who deviate from association rates shall be assessed on an amount of premium that would have been received had the association rates been charged. Any member-insurer may appeal to the commissioner of insurance to review and modify its assessment to assure that the assessment complies with the provisions of this Section. Credit in assessment shall not be taken for dividends paid to policyholders. The association shall have the right to charge subscribers for services rendered, and to charge members and subscribers reasonable entrance and annual membership and subscription fees.
(2) Upon the failure of any member or subscriber of the association to pay its lawful proportion of said expenses and the fees due by it, within thirty days after the same is due and payable, the association shall refuse to furnish its services to said delinquent and shall report such delinquency to the commissioner of insurance, who for such delinquency shall suspend or revoke the license of the delinquent member insurer.
F. The association shall be subject to all the provisions of this Subpart governing and regulating other rating organizations hereunder.
G. Debit fire insurance policies are defined as policies issued by companies which write fire insurance through debit agents operating on the debit agency system and which meet the other requirements of this section. The method of premium payment for debit fire insurance in the State of Louisiana shall be only on a monthly or more frequent basis from the date this act becomes effective. No debit insurance policy shall be issued for an annual or less frequent premium.
Rates for debit fire insurance and allied lines shall be filed directly with the commissioner of insurance and shall be approved and supervised as to both initial filings and requested changes only by the commissioner. In all other respects, the commissioner of insurance shall have sole supervision and regulation of the operation of debit fire insurance and allied lines in the State of Louisiana, such insurers being specifically exempt from the assessments levied by the association.
H. There shall be no liability on the part of and no cause of action of any nature shall arise against the Property Insurance Association of Louisiana or any of its officers, directors, or employees, or against any of its members for any inspections, audits or other statutory duties performed hereunder or any statements made in good faith by them in any reports or communications concerning risks submitted to the association, or at any administrative hearing conducted in connection therewith under the provisions of this Subpart.
I.(1)(a) Every insurance company authorized to write fire insurance in this state shall adhere to the rates promulgated by the Property Insurance Association of Louisiana and approved by the commissioner of insurance in accordance with Subsection A of this Section; however, whenever a public protection classification is changed to reflect improved fire protection in an area or for a governmental entity, the insurer shall reduce its premium for that policy and when the insurance protection class improves from a class two to a class one, the percentage amount of such premium reduction shall be uniform for all policies in the area whether the property is classified as commercial or residential. This reduction shall be granted prior to the next policy renewal or within sixty days from the effective date of the change in the public protection classification, whichever occurs first.
(b) Whenever a public protection classification is changed to reflect a detrimental change in fire protection in an area or for a governmental entity, an insurer may adjust its premium for that policy and the percentage amount of such adjustment shall be uniform for all policies in the area whether the property is classified as commercial or residential.
(2) The commissioner of insurance shall assess a penalty fine against any insurer which does not reduce its premium within the time periods specified in Paragraph (1) of this Subsection. The penalty shall be in an amount assessed by the commissioner but it shall be not less than one thousand dollars and not more than five thousand dollars per violation.
(3) All records of the commissioner of insurance that were used to determine the classification of a public fire protection area shall be open to inspection during normal business hours and upon reasonable notice given by the fire chiefs and the principal elected officials or their designees within the fire protection area. "Principal elected officials" means the mayors of towns, cities, and municipalities and the presidents of police juries.
J. A fire chief shall have the right to request a review of the public fire protection grading for his public fire protection area in accordance with R.S. 22:1461 through 1463.
K. The legislative auditor shall have authority to compile financial statements and to examine, audit, or review the books and accounts of the Property Insurance Association of Louisiana and the Louisiana Automobile Insurance Plan. In addition to the authority granted above, the legislative auditor shall have access to and be permitted to examine all paper, books, accounts, records, files, instruments, documents, films, tapes, and any other forms of recordation of the Property Insurance Association of Louisiana and the Louisiana Automobile Insurance Plan, including but not limited to computers and recording devices, and all software and hardware which hold data, are part of the technical processes leading up to the retention of data, or are part of the security system. The legislative auditor shall also have access to and be permitted to examine all paper, books, accounts, records, files, instruments, documents, films, tapes, and any other third-party administrator or contractor, whether public or private, of the Louisiana Citizens Property Insurance Corporation where such information is related to the work performed by the third-party administrator or contractor for the Louisiana Citizens Property Insurance Corporation.
L. The legislative auditor shall have authority to compile financial statements and to examine, audit, or review the books and accounts of the Property Insurance Association of Louisiana and the Louisiana Automobile Insurance Plan. The scope of the examinations may include financial accountability, legal compliance and evaluations of the economy, efficiency, and effectiveness of the private water supply systems or any combination of the foregoing. In addition to the authority granted above, the legislative auditor shall have access to and be permitted to examine all papers, books, accounts, records, files, instruments, documents, films, tapes, and any other forms of recordation of all private water supply systems, including but not limited to computers and recording devices, and all software and hardware which hold data, are part of the technical processes leading up to the retention of data, or are part of the security system.
M.(1) An advisory committee to the board of directors to the Property Insurance Association of Louisiana shall be formed. The advisory committee shall study and evaluate the public fire protection classification or grading for a public fire protection area, which shall include the Louisiana addendum to the ISO Fire Suppression Rating Schedule.
(2) The board of directors of the Property Insurance Association of Louisiana shall establish and provide for the meetings of the advisory committee which shall be composed as follows, with each individual member of the advisory committee serving as a voting member of the committee:
(a) Three members of the Property Insurance Association of Louisiana board of directors.
(b) One member from the Louisiana Fire Chiefs Association.
(c) One member from the Louisiana State Firemen's Association.
(d) One member from the Professional Fire Fighters Association of Louisiana.
(e) The director of the Fire Rating Division of the Property Insurance Association of Louisiana.
(f) The Louisiana State Fire Marshal.
(3) The chairman of the advisory committee shall be the executive director of the Property Insurance Association of Louisiana and shall be a non-voting member.
(4) The advisory committee shall serve in an advisory capacity to the board of directors of the Property Insurance Association of Louisiana.
Acts 1958, No. 125. Amended by Acts 1958, No. 128, §§1-4; Acts 1960, No. 296, §1; Acts 1962, No. 53, §1; Acts 1966, No. 136, §1; Acts 1974, No. 429, §1; Acts 1975, No. 311, §1; Acts 1979, No. 155, §1; Acts 1979, No. 646, §1; Acts 1987, No. 931, §1; Acts 1990, No. 252, §1; Acts 1995, No. 158, §1; Acts 1995, No. 326, §1; Acts 1999, No. 837, §1; Acts 1999, No. 1023, §1; Acts 2003, No. 456, §1; Acts 2003, No. 628, §1; Acts 2006, No. 809, §1; Acts 2007, No. 420, §1; Acts 2007, No. 459, §§1, 3, and 4, eff. Jan. 1, 2008; Acts 2007, No. 468, §1; Redesignated from R.S. 22:1405 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009; Acts 2008, No. 900, §1, eff. July 9, 2008; Acts 2009, No. 326, §1, eff. Jan. 1, 2010.
NOTE: Former R.S. 22:1460 redesignated as R.S. 22:871 by Acts 2008, No. 415, §1, eff. Jan. 1, 2009.