Louisiana Revised Statutes 22:2061.1 – Net worth exclusion
Terms Used In Louisiana Revised Statutes 22:2061.1
- Association: means the Louisiana Insurance Guaranty Association created under Louisiana Revised Statutes 22:2055
- Association similar to the association: means any guaranty association, security fund or other insolvency mechanism that affords protection similar to that of the association. See Louisiana Revised Statutes 22:2055
- Commissioner: means the commissioner of insurance of this state. See Louisiana Revised Statutes 22:2055
- Covered claim: means the following:
(a) An unpaid claim, including one for unearned premiums that arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this Part applies issued by an insurer, if such insurer becomes an insolvent insurer after September 1, 1970, and the policy was issued by such insurer and any of the following:
(i) The claimant or insured is a resident of this state at the time of the insured event, provided that, for entities, the residence of a claimant or insured is the state in which its principal place of business is located at the time of the insured event. See Louisiana Revised Statutes 22:2055
- Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
- Insolvent insurer: means an insurer who meets both of the following criteria:
(a) Is licensed and authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred. See Louisiana Revised Statutes 22:2055
- Insured: means any named insured, any additional insured, any vendor, lessor, or any other party identified as an insured under the policy. See Louisiana Revised Statutes 22:2055
- Lawsuit: A legal action started by a plaintiff against a defendant based on a complaint that the defendant failed to perform a legal duty, resulting in harm to the plaintiff.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: means any natural or juridical person, company, insurer, association, organization, reciprocal or inter-insurance exchange, partnership, business, trust, corporation, or other entity, including governmental entities. See Louisiana Revised Statutes 22:2055
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- Subpoena: A command to a witness to appear and give testimony.
A. For purposes of this Part, “high net worth insured” means any policyholder or named insured, other than any state or local governmental agency or subdivision thereof, whose net worth exceeds twenty-five million dollars on December thirty-first of the year prior to the year in which the insurer becomes an insolvent insurer. An insured’s net worth on that date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries and affiliates as calculated on a consolidated basis. The consolidated net worth of the insured and all of its affiliates shall be calculated on the basis of their fair market values. The members of a group self-insurance fund formed pursuant to La. Rev. Stat. 23:1191 et seq. shall not be deemed to be affiliates of the fund and shall not be included in the determination of the net worth of the fund. For the purposes of this Section, a group self-insurance fund, and each individual member of the fund upon whose behalf a claim is submitted, shall be deemed to be policyholders or named insureds of any policy of insurance issued to the fund. B.(1) The association shall not be obligated to pay any claims or provide a defense to any claims asserted for coverage under a policy when the insured is a high net worth insured.
(2) The association shall have the right to recover from a high net worth insured all costs incurred and all amounts paid by the association to or on behalf of such insured, whether for indemnity, defense or otherwise, including attorney fees, administrative costs, court costs, settlement, or other defense costs.
C. The association shall not be obligated to pay any claim that would otherwise be a covered claim that is an obligation to or on behalf of a person who has a net worth greater than that allowed by the insurance guaranty association law of the state of residence of the claimant at the time specified by that state’s applicable law, and which association has denied coverage to that claimant on that basis.
D. The association shall maintain reasonable procedures subject to the approval of the commissioner for requesting financial information from insureds on a confidential basis for purposes of applying this Section. The financial information may be shared with any other association similar to the association and the liquidator for the insolvent insurer on the same confidential basis but shall otherwise be kept strictly confidential. The financial information provided by the insured subject to these procedures is not subject to discovery, subpoena, or other disclosure, unless the association and the high net worth insured are compelled to disclose this information by a valid and final court order in a proceeding to which the association was provided with notice and an opportunity to object to the disclosure of the information. Any request to an insured seeking financial information shall advise the insured of the consequences of failing to provide the financial information. If an insured refuses to provide the requested financial information where it is requested and available, the association may, until such time as the information is provided, provisionally deem the insured to be a high net worth insured for the purpose of denying a claim pursuant to Subsection B of this Section.
E. In any lawsuit contesting the applicability of this Section where the insured has refused to provide financial information under the procedure established pursuant to Subsection D of this Section, the insured shall bear the burden of proof concerning its net worth at the relevant time. If the insured fails to prove that its net worth at the relevant time was less than the applicable amount, the court shall award the association its full costs, expenses and reasonable attorney fees in contesting the claim.
Acts 2010, No. 959, §1, eff. July 6, 2010; Acts 2012, No. 271, §1; Acts 2023, No. 444, §1, eff. June 28, 2023.