September 26, 2023

Louisiana Insurance coverage Commissioner Jim Donelon final week issued a cease-and-desist order in opposition to a Houston-based legislation agency, accusing it of fraud involving doubtlessly a whole lot of hurricane-related claims in his state.

“The scale and scope of McClenny, Moseley & Associates’ unlawful insurance coverage scheme is like nothing I’ve seen earlier than,” Donelon said in a press release. “It’s uncommon for the division to situation regulatory actions in opposition to entities we don’t regulate, however on this case, the order is critical to guard policyholders from the agency’s fraudulent insurance coverage exercise.”

Based on Donelon, the legislation agency filed greater than 1,500 hurricane declare lawsuits in Louisiana over the span of three months final 12 months.

The Louisiana property insurance coverage market has been deteriorating for the reason that state was hit by file hurricane exercise in 2020 and 2021, to the extent that 11 insurers that write owners protection in Louisiana have been declared bancrupt between July 2021 and September 2022. Insurers have paid out greater than $23 billion in insured losses from over 800,000 claims filed from the 2 years of heavy hurricane exercise. The biggest property-loss occasions have been Hurricane Laura (2020) and Hurricane Ida (2021).

Along with driving insurer insolvencies, the rising losses have brought about a dozen insurers to withdraw from the market and greater than 50 to cease writing new enterprise in hurricane-prone parishes.

Louisiana’s troubles parallel these of one other coastal state, Florida, however there are important variations. Florida’s issues are largely rooted in many years of authorized system abuse and fraud, whereas Louisiana’s have had extra to do with insurers being undercapitalized and never having sufficient reinsurance protection to face up to the claims incurred through the record-setting hurricane seasons of 2020 and 2021. Basically, Louisiana insurers haven’t skilled the extent of extreme litigation that Florida insurers have confronted.

“It now seems some trial attorneys are attempting to take a web page out of the Florida playbook by participating in litigation abuse in opposition to Louisiana property insurers,” mentioned Triple-I Director of Company Communications Mark Friedlander. “We commend Commissioner Donelon for rapidly addressing these fraudulent practices.”

According to reporting by the Instances Picayune/New Orleans Advocate, an investigation by the Louisiana Division of Insurance coverage discovered the Houston-based agency engaged in insurance coverage fraud and unfair commerce practices by way of Alabama-based Apex Roofing and Restoration and has confronted accusations of potentially criminal habits in courts throughout the state. In a single such case, the paper reported, a lady testified that she had by no means meant to retain the legislation agency when she employed the roofing firm to repair her hurricane-damaged roof.

“The agency informed her insurance coverage firm that it represented her and even filed a lawsuit on her behalf, although she mentioned she was unaware of it,” the paper mentioned. 

Authorized system abuse is a pervasive downside that contributes to larger prices for insurers and policyholders nationwide, in addition to to rising prices typically, given the significance of insurance coverage in improvement and commerce. Triple-I is dedicated to informing the dialogue round this vital situation.

Study Extra:

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