Louisiana's insurance law is the Louisiana Insurance Code, Title 22 of the Louisiana Revised Statutes (La. R.S. 22). Department regulations are in Title 37 of the Louisiana Administrative Code (LAC 37). Louisiana is also the one state whose private law comes from a civil code rather than English common law, and that shows up in how contracts are read. This guide covers the Louisiana rules on the regulator, producer licensing, appointments, CE, unfair trade practices, fraud and the guaranty associations, with citations. General regulatory concepts are in the national Insurance Regulation guide.

About the exam

Louisiana producer exams are given by PSI for the Louisiana Department of Insurance. The passing score is 70% (R.S. 22:1545(A)).

Louisiana sells all seven exams, including both combined exams.

• No prelicensing education is required for producer licenses. Only the public adjuster and bail bond exams have prelicensing requirements.
• A candidate who fails or misses an exam must reapply and pay all fees again before being rescheduled (R.S. 22:1545(H)).
• An applicant must pass the exam for each line requested (R.S. 22:1546(A)(6)).
• Applicants submit fingerprints for state and FBI background checks (22:1546(D)).

The regulator and the legal system

• The Commissioner of Insurance is elected statewide, at the same election as the governor, for a four-year term (R.S. 22:2(A)(1)).
• A chief deputy commissioner, appointed by the Commissioner, acts when the Commissioner is absent or unable to act.
• The Commissioner may adopt reasonable rules not inconsistent with law (22:2(E)).
• The Department includes an office of insurance fraud (22:3; 22:1921).
• Examinations. Every insurer is examined at least once every five years (22:1981). A producer may be examined after three complaints within 30 days.
• Annual statements are due March 1. Failing to file can cost an insurer its certificate of authority (22:571).
• Hearings.
  • A person aggrieved by an order demands a hearing within 30 days of notice.
  • Hearings are held by the Division of Administrative Law, within 30 days of receiving the demand and no later than 60 days after the original demand unless the parties agree otherwise.
  • A demand for a hearing does not stay the order unless the Division grants a stay (22:2191, 22:2204).
  • Before acting, the Commissioner issues a notice of wrongful conduct with a chance to show cause (22:2195).
• Civil law. Louisiana contract law is in its Civil Code. Under Civil Code art. 2056, a doubtful provision in a standard-form contract, such as an insurance policy, is read against the party who wrote it and in favor of the other party. That means it is read in favor of the insured.

Insurer types (22:46):

• Domestic: formed in Louisiana
• Foreign: formed in another state
• Alien: formed in another country
• Unauthorized: has no Louisiana certificate of authority

Producer licensing

Definitions (22:1542):

• Sell: exchange a contract of insurance for money on behalf of an insurer.
• Solicit: urge someone to apply for a particular kind of insurance from a particular insurer.
• Negotiate: confer with a buyer about a specific policy's terms.

A license by itself gives no authority to bind or represent an insurer. That authority comes from the insurer, for example through an appointment.

Lines of authority (22:1547(A)):

• life, which includes annuities and may include AD&D and disability income
• accident and health or sickness
• variable life and variable annuity, a separate line
• property
• casualty
• personal lines (P&C for individuals and families for noncommercial purposes)
• limited life, health and accident, with life coverage of up to $30,000 per policy
• surplus lines broker, available to a P&C or A&H producer with a Louisiana office and two years of experience who passes an exam (22:1547(I))

Resident applicants (22:1546):

• must be at least 18
• a person with a felony involving dishonesty or breach of trust needs the Commissioner's written consent under 18 U.S.C. 1033
• a business entity designates a licensed producer responsible for its compliance
• a business entity registers anyone who controls 10% or more of it, and reports each permanent branch office within 30 days, with a licensed producer registered there; violations carry a $100 fine each

Not required to be licensed (22:1544(B)):

• clerical employees who earn no commission
• a salaried employee who only advises their own employer about its insurance

Assumed names (22:1552). A producer notifies the Commissioner before using a trade name and includes a Secretary of State registration letter. Penalties for using an unapproved name:

• up to $250
• plus up to $5,000 if use continues 10 days after notice to stop

Controlled business (22:1544(C)). Controlled business is insurance on the licensee, the licensee's immediate family, or the licensee's employer. A license is deemed used for controlled business when those commissions exceed 25% of total commissions in any 12 months.

Exam exemptions (22:1551):

• a resident applying for the same line held under a Louisiana license that expired within two years, unless it was revoked or suspended
• applicants for credit insurance only
• a producer moving to Louisiana who applies within 90 days of establishing residence

Nonresidents (22:1548):

• licensed if in good standing in a home state that reciprocates
• must designate the Commissioner as agent for service of process
• the Louisiana license loses good standing automatically if the home-state license does
• a Louisiana resident who moves away files a change of address with certification from the new state within 30 days

Temporary licenses (22:1553):

• last up to 180 days, without an exam
• available to:
  • the surviving spouse, next of kin or representative of a deceased or disabled producer
  • the designee of a producer entering military service
• the Commissioner may require a sponsor who takes responsibility for the licensee's acts

Renewal (22:1547):

• Licenses renew every two years and stay in effect while fees are paid and CE is met. A late filer pays a late fee.
• A license lapses if CE isn't done by the renewal date. Within two years, it can be reinstated by proving all CE and paying fees. After two years, the person must qualify for a new license.
• A producer on active military duty, or facing another extenuating circumstance, may request a waiver of renewal procedures (22:1547(E)).

Reporting:

• Changes of address, legal name or application information are reported within 30 days, with a $50 penalty per violation (22:1547(G)).
• Administrative actions in another jurisdiction are reported within 30 days of final disposition. Criminal convictions are reported within 30 days (22:1563).

Continuing education (R.S. 22:1573; LAC 37:XI.711, Rule 10)

• A new P&C producer completes the flood hours at the first renewal that requires CE.
• Up to 10 excess hours carry over. Excess ethics or flood hours carry over only as general credit.
• No credit is given for the same course more than once in 24 months, or for licensing-exam prep courses.
• Instructors earn the same credit as students.
• Up to 4 hours per period are available for active participation in an insurance association. Credit may also be given for designations such as CLU, CPCU or CIC.
• Exempt: producers 65 or older with 15 years of licensed experience who meet the retirement or activity test, and nonresidents who meet their home-state CE.

Appointments (22:1558, 22:1559)

• A producer must be appointed before acting as an insurer's agent. No appointment is needed for:
  • surplus lines placed through a licensed surplus lines broker
  • workers' comp placed with LWCC
• The insurer files the appointment within 15 days after the agency contract is signed.
• The Commissioner checks the producer's eligibility within 30 days.
• A contracted producer may submit business before the appointment is recorded, but no commission may be paid until it is.
• Termination notice to the Commissioner:
  • for a cause listed in 22:1554: within 15 days
  • for any other reason: within 30 days
• The producer may file written comments within 30 days.

Commissions and premium

• Commissions go only to licensed persons. A former producer who was licensed at the time of sale may keep receiving renewals (22:1557).
• Paying an unlicensed person is a crime. The fine is $2,000 to $50,000, with up to three years in prison (22:1562).
• Fire and casualty insurers' commissions must be uniform for all classes of producers (22:1557(C)).
• Expirations. The producer has exclusive use of the expirations on business they wrote. When an agency contract ends but the law requires the insurer to keep renewing, the insurer pays commission on those renewals for 36 months (22:23).
• Producer of record. Health commissions follow the current producer of record (22:1564).
• Quoted premium (22:855). A quote must be a single dollar amount including all charges.
  • Agency fees are itemized separately and are not premium.
  • On a standard-rate homeowners or personal auto policy, the agency fee is capped at $25.
• Converting premium. A producer who converts premium with intent to permanently keep it commits theft (22:1554(J)).

Discipline (22:1554)

Grounds for discipline include:

• misappropriating or converting premium
• cheating on the license exam, including using notes
• forging a name on an application
• a felony conviction or nolo contendere plea
• failing to pay child support or state income tax
• issuing a binder for an insurer the producer isn't authorized to bind (22:1555)

Penalties and effects:

• fines of up to $500 per violation, with a $10,000 cap per calendar year
• a suspension or revocation covers all lines the producer holds
• after a revocation, the person waits one year before reapplying

Unfair trade practices (R.S. 22:1964)

• Misrepresentation and twisting (22:1964(1)). This includes misrepresenting a policy to induce a lapse or surrender (twisting), and calling a policy "shares of stock."
• False advertising (22:1964(2)).
• Defamation of an insurer's finances (22:1964(3)).
• Boycott, coercion or intimidation (22:1964(4)).
• False financial statements (22:1964(5)).
• Unfair discrimination (22:1964(7)).
  • In life insurance, the test is the same class and equal expectation of life.
  • Insurers may not refuse coverage solely because of sex, marital status, race, religion or national origin, the age of a residence, or because another insurer refused or cancelled the applicant.
  • Refusing coverage solely because of location is unfair unless it rests on sound underwriting and actuarial principles.
  • An insurer may not nonrenew auto coverage solely because of bankruptcy.
• Rebating (22:1964(8)). Rebating means any rebate of premium or inducement not specified in the contract. A group premium readjusted for loss experience is not a rebate (8.1).
• Lender tying (22:1964(9)). A lender may not require insurance through a particular producer or insurer.
• Tying (22:1964(10)). Requiring purchase of another product to buy a health plan is prohibited. Selling group life together with group health is allowed.
• Claims practices (22:1964(14)). These are violations when committed often enough to be a general business practice. Claim forms are due within 15 calendar days of a request. The claim file is available to the insured on written request.
• False applications (22:1964(18)). False statements on an application to earn a commission are prohibited.
• "Financial planner" (22:1964(19)). A producer who only sells policies may not hold out as a financial planner. A fee for planning needs a signed agreement, kept three years.
• Loss history (22:1964(20), (21)). Personal lines insureds get three years of loss history within 30 days of a written request. Commercial insureds get five years within 10 business days.
• Prenatal and genetic tests may not be used to discriminate in health coverage (22:1964(23), (24)).
• Limited benefit replacements (22:1964(28)). Deliberate misrepresentation to replace a limited benefit policy is an unfair practice.

Penalties (22:1969, 22:1970):

• If the person didn't know the act was a violation: up to $1,000 per act, with a $100,000 aggregate cap.
• If the person knew or should have known: up to $25,000 per act, with a $500,000 cap in six months.
• Someone who doesn't answer a notice within 20 days may receive a cease and desist order without a hearing.
• Violating a cease and desist order costs up to $25,000 per violation, with a $250,000 cap.

Fraud (R.S. 22:1921 to 22:1928)

• Knowingly presenting false information in an application, rating or claim is a fraudulent insurance act (22:1923).
  • The penalty is up to five years and $5,000 per count.
  • If the benefit is $1,000 or less, the penalty is up to six months and $1,000.
  • Restitution includes the insurer's investigation costs (22:1924).
• Auto fraud (22:1925). Staging a collision or filing multiple claims for one loss is a felony. Merely possessing a fake proof-of-insurance card carries up to $500 and six months.
• Reporting. Producers, adjusters and others in the business must report suspected fraud to the office of insurance fraud within 60 days (22:1926). Good-faith reporters are immune (22:1928).

Guaranty associations

Louisiana Life and Health Insurance Guaranty Association (R.S. 22:2082, 22:2083):

• life death benefits: $300,000
• cash value: $100,000
• annuity present value: $250,000
• aggregate per individual: $500,000
• the association's summary document and disclaimer go to the buyer at or before policy delivery
• no one may use the association's existence to make a sale (22:2098)

Louisiana Insurance Guaranty Association (LIGA) (R.S. 22:2052, 22:2058):

• covered claims below $500,000 per claim, with a $500,000 cap per occurrence
• workers' comp benefits paid in full
• unearned premium up to $10,000 per policy
• surety bonds, life, health, title and ocean marine are excluded
• member assessments are capped at 2% a year
• LIGA owes no late-payment penalties (22:1892(H))

Common exam traps

• The Commissioner is elected for four years.
• Exams are given by PSI, need 70%, and have no prelicensing requirement.
• CE is 24 hours with 3 of ethics. P&C producers add 3 hours of flood. Up to 10 hours carry over.
• An appointment is filed within 15 days. A for-cause termination is reported in 15 days, and other terminations in 30.
• Address changes are due in 30 days, with a $50 penalty.
• Suspected fraud is reported within 60 days.
• Controlled business is presumed above 25% of commissions.
• Civil Code art. 2056 reads doubtful policy language in favor of the insured.