Insurers Face Angry Louisiana Politicians As Policyholder Frustrations Mount

"If I was in the insurance industry, I would be concerned about what legislation looks like next year," said Rep. Tanner Magee, the second-ranking leader in the House and a Houma Republican whose district — and personal home — was pummeled by Ida. "So many parts of Louisiana are dealing with crazy difficulties from insurers ... This is not a good faith effort."

But frustrations with insurers is loudest in Lake Charles and Sulphur, where candidates are campaigning to fill a vacant state Senate seat once held by an affable insurance agent. Fifteen months out from Hurricane Laura, many residents there remain at-odds with their insurance companies, unable to rebuild as they wait to be compensated.

Stuck in a sort of "insurance purgatory," facing slow responses, repeated delays and blatantly low settlements, voters in Senate District 27 are angry at their insurers. And so too are their candidates.

"Insurers are ruining people's lives," said Dustin Granger, a Democratic contender. "They use endless delay tactics, hoping people settle for less, and a lot of the poor can't do anything about it, and they give in."

Jeremy Stine, a Republican candidate, agreed that no matter the issue, insurance companies will find a way to "delay, delay, delay," in order to avoid making payments. He said one word comes to mind to describe insurers' actions: greed.

"And the punishment for that deadly sin of greed is condemnation and hell for all eternity, and the Christian tradition is to boil you alive in oil," Stine said at a legislative hearing in September. "I like to joke, it's a bayou classic pot with some nice peanut oil and some Cajun seasoning."

It isn't just empty rhetoric either. Both candidates are pledging to take on the insurance industry if they're elected. And they're betting that by the time the Legislature convenes for the next regular session in March, lawmakers across southeast Louisiana will also be on board to hold insurers' feet to the fire.

'The continue to delay us'

To deter insurers from giving policyholders the run-around, both candidates want to see Louisiana's bad faith penalties strengthened.

A court can determine that an insurer acted in bad faith for a variety of reasons. Generally, insurers have an obligation to settle claims within 30 days of receiving proof of loss. Failure to meet that timeline is typically considered acting in bad faith, and it comes with a penalty: insurers have to pay up to 50% extra to policyholders on top of the claim owed.

But Stine said, "that doesn't seem to have deterred them or done a whole lot. They continue to delay us." He suggested doubling the penalty to 100%, saying that "would absolutely get insurers' attention."

Granger, too, said the Legislature should increase bad faith penalties — "by a lot."

Both candidates also said the endless adjuster-swapping needs to end. Each time a new adjuster takes over, the claims process effectively begins again, requiring policyholders to spend hours explaining their situation and re-uploading photos. The average policyholder will interface with seven different adjusters, they both noted.

"Most people, especially if you're not wealthy and privileged, don't have time for it and they just settle for less, and the insurance companies know that and that's the game they play," Granger said.

Granger, 41, a financial planner, suggested a penalty on insurers who jack policyholders around between adjusters. He said he'd also like to standardize the initial claims process and extend the statute of limitations on when policyholders can sue insurers.

Stine, 41, marketing director at Stine Lumber, said transparency legislation is also in order to answer the unknowns of how insurers are paying out claims and responding to policyholders.

"There seems to be a lot of things that are shrouded in secrecy in what they're doing," Stine said.

'They're very powerful'

In the aftermath of hurricanes Laura, Delta and Zeta, a string of lawmakers from southwest and central Louisiana filed legislation to correct insurers' bad behavior. But few measures made it out of committee with the sort of teeth lawmakers hoped.

Oftentimes, those proposals were scrapped or watered down after facing a wall of opposition from a cohort of well-funded industry lobbyists.

"When you have a dozen lobbyists opposing your legislation, it's very difficult to succeed," said Rep. Brett Geymann, a Lake Charles Republican. "They're very powerful."

Given that influence, both candidates in the race to replace Ronnie Johns have campaigned as unbought, independent voices — while taking pains to highlight their opponent's insurance industry ties.

Granger, the Democrat, sent out a press release in October, slamming Stine for accepting donations from lobbyists who work for State Farm, Allstate and other insurers, and highlighting the candidate's close ties with the Louisiana Association of Industry and Business.

Out of nearly $300,000 in donations, Stine has collectively received around $3,000 from firms like Southern Strategy Group, Adams & Reese, Haynie & Associates, Pivotal GR Solutions and Jones Walker, all of whom represent insurance companies, campaign finance reports show.

"It's going to be hard for him to actually fight," Granger said. "I'm not saying he wouldn't do anything, maybe he would. But we may have some watered-down bills and they won't get to the root cause of what we really need."

Stine noted, accurately, that he hasn't "taken a penny from insurance corporations" directly.

"When I started this campaign, one of the things I wanted to do was insurance reform, so I told my team, under no circumstances are we ever going to accept any money from insurance corporations," Stine said.

Kevin Cunningham, a partner at Southern Strategy Group, said that when Stine visited their offices, he made it clear he didn't want insurance industry money. Cunningham lobbies on behalf of the American Property Casualty Insurance Association but noted that insurers make up a sliver of the interest groups he represents.

A consultant for Stine's campaign, Lauren Griffin, shot back at Granger, pointing to a $150 donation the Democrat had received from Cenla Independent Insurance. Granger, who has raised roughly $88,000, said the donation came from his best friend, adding that the firm sells health insurance, not property insurance.

Griffin also said that as a financial planner and a registered insurance agent, Granger presumably invests millions into insurance companies and also sells annuities. Granger said Stine's camp was grasping at straws.

Amid the back-and-forth, a third contender in the race, Jacob Shaheen, a middle school math teacher, has staked his campaign on combatting money in politics. He's raised $1,200 and said if he wins, he wants to end corporate campaign donations.

"Most of our politicians are essentially corporate cronies," said Shaheen, 31, a Republican. "It's a business decision to give money to politicians, and the biggest companies, they just give money to everybody, and that's how they maintain their power."

A balancing act

Given the scope of Hurricane Ida's destruction, Insurance Commissioner Jim Donelon expects the next legislative session to include a deluge of insurance legislation. But on the marquee issue of strengthening bad faith penalties, he warned lawmakers that going too far could hurt consumers.

"The more you add in penalties, the more you add in premiums," Donelon said. "I would caution the Legislature against putting more litigation into the process. We have a bad faith law on the books that has served us, I think, pretty well."

Louisiana is a relatively small insurance market, and its properties face an outsized exposure to hurricanes. Donelon warned that new regulations could drive insurers from the market, a concern that's often repeated by insurance industry lobbyist when legislation comes up for consideration.

"There is a concern that you can overregulate and over-legislate a market where it can be so difficult for a company to operate here that they choose not to," Cunningham, with the Southern Strategy Group, said.

Donelon said he's trying to "strike that balance between regulating as heavily as I can on behalf of consumers and policyholders without chasing off the market that we have for property insurance in a very, very challenged part of America."

But that balance is currently off-kilter, said Eric Holl, with Real Reform Louisiana, a nonprofit which advocates for stricter insurance regulations.

"Right now, the market is balanced completely in favor of the insurance companies and completely against the consumers," Holl said. "It's not a healthy insurance market if people are getting ripped off by the thousands."

Holl said bad faith penalties are really the "only thing we have in law to make insurance companies think twice before they decide to rip somebody off." He said that insurers choose to act in bad faith as a cost-saving measure, knowing that only a small subset of disputes will end up in court.

During the last regular legislative session, Rep. Geymann tried to double the maximum penalty for more serious bad faith claims from two-times the damages to four-times the damages. The legislation was gradually whittled down, and by the time it got signed by Gov. John Bel Edwards, it simply increased the minimum penalty from $1,000 to $2,500.

In an ideal world, Geymann said the Legislature wouldn't have to intervene, describing himself as a "pro-business, conservative, free market" lawmaker. But he said the status quo isn't sustainable.

"The number of people that are not being taken care of is significant," Geymann said. "There has to be a better way, something that's quicker and fairer and makes people whole."

"I think insurers need the threat of the Legislature taking action to make them perform," Geymann said.

Are you facing issues with your insurance company in Hurricane Ida's aftermath? Send your story to bpaterson@theadvocate.com and a reporter may reach out.

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