Louisiana Insurers Lose Ground in Chinese Drywall Battle


The Insurance Journal is reporting that insurance companies in Louisiana are continuing to lose ground in the ongoing battle against a ban on dropping or changing property insurance coverage because of corrosive Chinese-made drywall.

The proposal will now be debated by the state’s full House of Representatives, after finally gaining approval from the House Insurance committee. The Senate has already given the bill, SB 595 – authored by Senator Julie Quinn (R-Metairie) – its unanimous backing.

Representatives of the insurance industry argue that the bill violates existing contracts and could force a statewide increase in insurance premiums. Lobbyists for insurers claim that if the bill is approved, it will be challenged in court because it is retroactive.

Representative Chuck Kleckley (R-Lake Charles), chairman of the House committee, attempted to have the retroactivity clause removed, but a 6-2 vote against him blocked the attempt, and the House then approved the bill without objection. Afterward, Kleckley joked, “I don’t have many friends.”

If approved, Senator Quinn’s bill will prohibit property insurance companies from refusing to renew, canceling, or increasing premiums or deductibles for homes or businesses constructed with Chinese drywall. The wallboard in question is being blamed for health concerns and home corrosion.

The ban would be in force through July 1, 2013, and any insurer found to be violating the terms of the bill would face a penalty of up to $15,000, plus court costs and attorney fees.

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