Louisiana Surplus Lines flashcards

31 cards. Read the term and the definition here. The deck at the top of this page is optional.

Commissioner of Insurance

Elected Louisiana official who heads the Department of Insurance, enforces Title 22, and has authority to examine, fine, suspend, or revoke licenses of insurers and producers.

Producer continuing education

Louisiana licensees complete 24 credit hours every two years, including at least 3 hours of ethics, and must retain certificates of completion for audit by the Department.

Change of address reporting

A licensed Louisiana producer must notify the Department of Insurance of a change in business or mailing address within the statutory period; failure is a reportable violation.

Insurance fraud statute

Louisiana law makes intentional misrepresentation on an application or claim a crime and requires insurers to maintain fraud-prevention plans and report suspected fraudulent claims.

LIGA

The Louisiana Insurance Guaranty Association pays covered claims of insolvent admitted insurers. Surplus lines insurers are not members, so their policies carry no guaranty-fund protection.

Administrative action reporting

Producers must report criminal prosecutions and administrative actions taken by other states to the Louisiana Department of Insurance within statutory timeframes, even if the action is under appeal.

Unauthorized insurer examination

The Commissioner may examine the affairs of unauthorized insurers transacting surplus lines business in Louisiana to the extent permitted by law and may withdraw eligibility.

Diligent search requirement

Before placing a risk with a surplus lines insurer, the producer must attempt placement with authorized insurers writing that class and document the declinations.

Eligible surplus lines insurer

An unauthorized insurer that meets Louisiana capital, surplus, and reporting standards and appears on the Department's approved list, making it eligible to receive surplus lines placements.

Surplus lines verified statement

A report of each surplus lines placement filed with the Commissioner or designated stamping office within the statutory period, typically 30 days after placement.

Surplus lines disclosure notice

A conspicuous policy notice stating the insurer is not licensed in Louisiana, is not subject to state rate and form filing, and is not protected by the guaranty fund.

Premium tax remittance

The surplus lines producer collects and remits premium tax and the applicable stamping fee on surplus lines business; failure to remit can result in license discipline and personal liability.

Rate and form freedom

Surplus lines insurers are generally exempt from Louisiana rate and form filing requirements, but remain subject to market conduct exams and unfair trade practice laws.

Independently procured coverage

A narrow statutory exception allowing an insured to obtain coverage directly from a non-eligible unauthorized insurer without a surplus lines producer, subject to tax and reporting duties.

Surplus lines record retention

Producers must keep records of the diligent search, placement documents, and tax filings for the period required by Louisiana regulation and make them available on examination.

Insurable interest

A pecuniary stake in the subject matter such that the insured suffers financial loss from its destruction; required at loss in property insurance, at inception in life.

Principle of indemnity

Property insurance restores the insured to approximately the pre-loss financial position, limited by policy limits, deductibles, and valuation method such as actual cash value.

Utmost good faith

A mutual duty of disclosure requiring both parties to reveal material facts; concealment or material misrepresentation on an application can permit rescission of the policy.

Contract of adhesion

A policy drafted by the insurer and accepted or rejected by the insured; ambiguities in coverage are generally construed against the insurer under contra proferentem.

Aleatory contract

An insurance contract in which the parties' performance is unequal and contingent on chance; the insured pays a fixed premium while the insurer's payout depends on a covered event.

Coinsurance formula

Recovery equals loss multiplied by limit carried divided by limit required, where limit required is the coinsurance percentage times the property's value at loss.

Subrogation

The transfer to the insurer of the insured's right to recover from a negligent third party after the insurer pays the claim, preventing double recovery by the insured.

Proximate cause

The dominant, efficient cause that sets in motion an unbroken chain of events producing the loss; it determines coverage when multiple perils contribute to a claim.

HO-3 special form

A homeowners form covering the dwelling and other structures on an open-peril basis while personal property is covered on a named-peril basis; HO-5 covers both open-peril.

Wind/hail percentage deductible

A coastal Louisiana homeowners deductible expressed as a percentage of the Coverage A dwelling limit rather than a flat dollar amount, applied to wind or hail losses.

Commercial property coinsurance

A clause requiring the insured to carry a stated percentage of property value (commonly 80%, 90%, or 100%) or face a proportional reduction in claim recovery.

Business income coverage

Time-element coverage replacing lost net income plus continuing normal operating expenses during the period of restoration following a covered physical loss.

CGL Coverage A

Commercial general liability coverage for sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence.

Claims-made versus occurrence

Occurrence policies respond to injury or damage occurring during the policy period; claims-made policies respond when the claim is made, subject to the retroactive date.

Workers' compensation Part One

The Louisiana statutory no-fault benefit section of a workers' compensation policy, providing unlimited medical and indemnity benefits to employees for work-related injury.

Umbrella versus excess liability

An umbrella sits above underlying limits and may drop down to cover gaps; an excess policy follows form above the underlying limits and does not drop down.