§ 22:1460 — Fire insurance rates; the Property Insurance Association of Louisiana

Louisiana § 22:1460

• Jurisdiction: Louisiana
• Title 22: Insurance

Text

§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 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(c) Repealed by Acts 2007, No. 459, §3, eff.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 include representatives of stock and nonstock
members with consideration given to the ratio of their direct fire insurance premiums, less
returned premiums, for the most recently available calendar year. Such direct fire insurance
premiums, less returned 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 (2)(f) and (g) 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 state of Louisiana, 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) Repealed by Acts 2013, No. 33, §2.
(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, written on properties located in
this state by each insurer in the year before the preceding year, provided that any insurer
member that 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 the expenses and the fees due by it, within thirty days after the same is due and
payable, the association may refuse to furnish its services to the delinquent and may report
such delinquency to the commissioner of insurance, who for such delinquency may 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.(1) 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.
(2) 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.
(c) No insurance company shall combine a higher classified public fire protection
area with a lower classified public fire protection area for the purpose of determining the fire
insurance rate for the combined public fire protection areas.
(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.
NOTE: Former R.S. 22:1460 redesignated as R.S. 22:871 by Acts 2008, No.
415, §1, eff. Jan. 1, 2009.

Legislative History

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; Acts 2010, No. 703, §1, eff. Jan. 1, 2011; Acts 2013, No. 33, §§1, 2; Acts 2017, No. 61, §1.