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Weekly News Roundup, October 25

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In this week's news will talk about how State Farm returns millions to policyholders, California launches first-ever community-based flood program, and much more...

Louisiana Commissioner pushes for insurance reforms

Louisiana Insurance Commissioner Tim Temple has identified key reforms needed to stabilize the state's challenging auto and home insurance markets, with a focus on reducing excessive litigation and strengthening building codes.

Current data shows Louisiana residents are 2.3 times more likely to enter into litigation, and twice as likely to file a bodily injury claim, which directly impacts insurance premiums across the state.

“Claims equal premium at the end of the day,” Temple said in an AMBest report. “You’ve got to have money to pay claims.”

The state legislature has taken steps toward revitalizing the sector, implementing direct action reform and litigation funding transparency laws. But the latest push was stalled when Gov. Jeff Landry vetoed a collateral source bill, which would have reduced certain medical payment thresholds.

Brownyard Group introduces cosmetics insurance

Brownyard Group has announced new financial protection for cosmetics businesses in the face of potential product recall risks.

The company is launching a new, optional coverage endorsement, to be added to its general liability (GL) policy for its cosmetics program, FOUNDATION. This new endorsement will add product recall coverage, underwritten by Hudson Insurance Group (Hudson), whose companies carry an A+ (Superior) rating from AM Best.

Product recall coverage endorsement reimburses costs associated with cosmetics manufacturers, distributors, and importers for withdrawing or recalling covered products.

Such costs include notification expenses, proper disposal expenses, overtime pay, and many more. The endorsement is available to all qualified businesses with a GL policy through FOUNDATION.

State Farm returns millions to policyholders

State Farm Mutual Automobile Insurance Co. has paid back $5.2-million to Montana policyholders after completing a necessary 18,000 claim reviews as part of a settlement with the Montana Commissioner of Securities and Insurance (CSI).

The settlement, which was concluded in February 2024, addresses unfair claim practices discovered in a two-year review of the company's methods by the state regulator. The carrier was penalized $4 million as part of the settlement with the potential deduction of $2 million in lieu of compliance measures.

CSI alleged failure to conduct reasonable investigations or provider adequate explanation for claims denial in some instances.

The company has now made all its necessary updates in policy and training of its staff as of August, thus achieving a $1 million deduction. A follow-up exam to begin in 2025 will determine the fate of the second $1 million suspension according to CSI, contingent on an error rate below 8%.

California launches first-ever community-based flood program

The California Department of Insurance (CDI) has announced the launch of a community-based flood program that will provide payouts if floodwaters reach a predetermined level.

The initiative, which is the first of its kind in the state, is part of broader efforts to address increasing flood risks driven by climate change, according to a report from AM Best.

The program is set to begin in Isleton, a small town in Sacramento County with fewer than 1,000 residents, according to US Census Bureau data. The town was selected due to its location in a 100-year floodplain, making it particularly vulnerable to flooding, according to CDI.

The new flood program will function separately from existing insurance policies and is intended to supplement current coverages. In the event of a significant flood, the program will provide “relatively small” payouts to residents.

Heritage Insurance estimates $105 million in hurricane losses for 2024

Heritage Insurance Holdings announced its estimated losses from Hurricanes Debby, Helene, and Milton.

The company, a super-regional property and casualty insurance holding entity, detailed financial impacts stemming from these storms, along with its response efforts.

Ernie Garateix, CEO of Heritage, acknowledged the significant damage caused by the hurricanes across the southeastern United States.

“This has been a difficult storm season leaving millions with significant damage and loss. At Heritage, we are working tirelessly to support our claimants and communities to ensure they have the necessary resources to quickly rebuild,” Garateix said.