LCBA&N attorneys secure pivotal decision for surplus lines carriers operating in Louisiana

Jim Nader and Chuck Rumbley obtained a favorable decision in the matter of Maloney Cinque, et al v. Pacific Insurance Company, Ltd., et al which was ultimately affirmed by the Louisiana Supreme Court. The Louisiana 4th Circuit Court of Appeals reversed a district court decision, and held that former LA R.S. 22:694, now LA R.S. 22:1317 is not applicable to surplus lines insurers. LA R.S. 22:694 requires that insurers, as a condition precedent for the inclusion of a coinsurance provision in an insurance policy, (1) obtain approval of the coinsurance clause from the commissioner of insurance; and (2) to allow for consideration "in the rate of premium charged" for that policy. The Louisiana Fourth Circuit opinion now makes it clear that this statute does not apply to surplus lines carriers. The Louisiana Supreme Court unanimously affirmed the ruling.

At least one federal district court in Louisiana, previously and incorrectly, ruled that because the statute did not distinguish between admitted and non-admitted carriers that the statute applied to surplus lines carriers. This ruling spawned a number of lawsuits in the wake of Hurricane Katrina whereby many insureds were attempting to avoid the consequences of coinsurance provisions in surplus lines property policies. This Fourth Circuit ruling brings clarity and resolution to this issue.

Recent Developments in Insurance Coverage Litigation

In the aftermath of the immense damage caused by Hurricane Katrina and Rita, flood damage exclusions, concurrent cause clauses, and valued policy statutes requiring payment of full policy limits in the event of a total loss have recently become of paramount importance in insurance litigation ... to read the complete paper ...  Download Paper.

From the:

Tort Trial Insurance Practice Law Journal, Winter 2007, American Bar Association

Co-Authored by:  James P. Nader

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