Louisiana Insurance Commissioner Reminds of Bans on Post-Loss Benefit Transfers in Insurance Claims

Louisiana Insurance Commissioner Timothy Temple on Friday, June 20, 2025, warned insurers, contractors and policy-holders that any attempt to transfer post-loss benefits from a property-insurance claim is "null, void and unenforceable" under state law, a reminder delivered in Advisory Letter 2025-02 that went out on the same day.

The letter restates that Act 364 from the 2023 regular session, now codified at La. R.S. 22:1275, forbids both the solicitation and the acceptance of an assignment of benefits, or AOB, on residential and commercial property policies. Temple's office says violators can be fined under the state's unfair-trade-practice statute, La. R.S. 22:1969.

An AOB is defined as any document that hands over a homeowner's or business owner's right to collect claim money to a third party such as a roofing contractor or public adjuster. The only exceptions are assignments granted to federally insured lenders, mortgage holders or buyers of the property, and the ban does not touch liability coverage.

Act 364 took effect on Aug. 1 2023 after a bipartisan Legislature responded to what regulators called a surge of litigation abuse in the wake of Hurricanes Laura, Delta, Zeta and Ida. In the thirty months after those storms, at least eleven Louisiana property insurers became insolvent and thousands of policyholders were shifted to the higher-priced Citizens plan, according to industry tallies and a Triple-I briefing.

State investigators say one catalyst for the crackdown was a scheme in which Houston law firm McClenny Moseley & Associates and roofing partner Apex Restoration used blanket AOB contracts to file more than 1,500 hurricane lawsuits, some on behalf of people who had never hired them. The Louisiana State Police and the FBI continue to probe the firm for alleged fraud.

Wholesale brokers and some consumer groups applauded the prohibition, arguing that it removes a middle-man structure that encouraged needless lawsuits and drove up premiums. Others contend the reform will not deliver immediate relief, with average homeowners rates still on track to rise more than twenty percent this year.

Louisiana joins Florida, which barred AOBs on new property policies issued after Jan. 1 2023 as part of an insurance overhaul signed by Gov. Ron DeSantis. Analysts note that Florida's litigation volume fell sharply after the change, a result Temple hopes to replicate.

Policyholders are being urged to read repair contracts carefully, keep receipts and photos, and report any contractor or adjuster who requests an AOB to the Department of Insurance fraud hotline at 225-342-4956 or by email at public@ldi.la.gov. Temple said the rule is simple: "No one other than you, your bank or your buyer can take control of your claim benefits."