Louisiana Assignment of Benefits Ban a Win for Insureds & Carriers

Louisiana’s property insurance market has been challenging after the state was hit by record hurricane activity during the 2020 and 2021 seasons. Louisiana suffered from a string of hurricane hits with Laura, Delta and Zeta hitting the state in 2020, followed by Ida in 2021. That heightened hurricane activity generated approximately 800,000 claims in those two years alone, resulting in $25 billion in paid losses that caused insurers to pull back from the Louisiana market (source 4). In fact, 11 insurers writing homeowners coverage in Louisiana were declared insolvent between July 2021 and February 2023. Twelve additional insurers withdrew from the state and 50 companies stopped writing new business in hurricane-prone parishes, creating a capacity crisis. On top of capacity issues, legal system abuse had become a persistent issue in recent years with strict bad faith laws contributing to inflated claims payments and awards (source 1).



During the 2023 legislative session, Louisiana lawmakers took strides to foster a healthier insurance marketplace in the state by passing a broad ban on assignment of benefits (AOB). AOB is the practice by which policyholders sign over their insurance benefits to a third party, such as a contractor, attorney, or public adjuster for repairs or other services. While AOB has become a common practice across the U.S., in some states – most notably, Florida and Louisiana – it had become a source of widespread claim fraud.1 It also frequently led to insurers being faced with unnecessarily high claims.

Hurricane Laura is estimated to have caused anywhere from $4 billion to $12 billion in damages to Louisiana and Texas.4

These problems were highlighted in February 2023, when Louisiana Insurance Commissioner Jim Donelon, ordered a Houston-based law firm to cease and desist, accusing the firm of committing fraud involving hundreds of hurricane-related claims in Louisiana. The firm had filed more than 1,500 Hurricane Laura claim lawsuits in Louisiana over the span of only three months in 2022, just prior to the deadline to file suits related to the Category 4 hurricane that struck in 2020.

An investigation by the Louisiana Department of Insurance found the Houston-based law firm, McClenny, Moseley & Associates (MM&A) engaged in insurance fraud and unfair trade practices through Alabama-based Apex Roofing & Restoration. MM&A started working with Apex Roofing in 2021, and their agreement revolved around AOBs. Apex’s strategy was to walk through neighborhoods and knock on doors after a hurricane or other major wind/hail event to drum up roofing claims and drive forced arbitration for full policy limits. According to the roofing company, MM&A was hired to review their clients’ policies, process the AOBs, and represent Apex’s interests with the insurance companies.3

Considering most homeowners in a neighborhood were insured by a limited number of insurance companies, this put the majority of losses on the same carriers, wiping out reserves and resulting in carrier downgrades while insurers grappled with what to do in the face of outsized losses. Since the commissioner’s original cease and desist, MM&A has faced accusations of criminal behavior along with growing sanctions and has since shuttered operations in Louisiana.1


Louisiana’s AOB ban follows a similar recent ban in Florida. In December 2022, Florida’s Governor signed Senate Bill 2-A, a new law to help support the state’s property insurance industry. One of the most important parts of that bill was its prohibition on assigning benefits. According to SB 2-A, Florida property owners with insurance policies issued after January 1st, 2023, may not assign their insurance benefits to another party.2

According to court documents, MM&A falsely claimed to represent the homeowner – not Apex – in at least 850 cases.3

Similarly, Louisiana policyholders can no longer assign post-loss benefits under residential or commercial policies to anyone providing services, such as a contractor. It does carve out assigning benefits to a lender or purchaser and applies only to property coverage. Closing the AOB loophole means assigning residential or commercial property insurance benefits is now illegal and considered an unfair or deceptive trade practice.


It is hoped that banning AOBs will help stabilize Louisiana’s property insurance market and attract new entrants to the space by reducing the strain on insurers and leading to lower prices for consumers. As measures are put into place to protect companies and policyholders from scams and financial strength rating downgrades, carriers will have the opportunity to take a different approach to insuring Louisiana property.

The Louisiana Legislature also agreed to allocate an additional $10 million for the previously approved insurer incentive program, bringing the total amount available to insurers that agree to enter the state’s home insurance market and offer new coverage, to $55 million. In addition, the legislature approved $30 million for a long-term grant program intended to help homeowners fortify their homes against hurricanes.1


Time will tell whether the fresh legislation will have the desired effect. However, hopes are high that Louisiana has paved the way for claims process reforms that should strengthen the property market for the long term. The state’s new law is good for carriers and should attract them to the area. It’s also good news for policyholders, ensuring that their coverage limits aren’t abused by a third party. Navigating placements in Louisiana can be complicated, and partnering with a trusted wholesale broker with extensive market access and knowledge can make a difference in your results. Reach out to your local CRC Group producer today to learn how we can help your insureds navigate the evolving coverage landscape in Louisiana.


  • Buddy Campo is a Regional Director with CRC Group’s Metairie, LA office. John Dauzat is a Property Broker with CRC Group’s Dallas, TX office.
  • Kip Ulmer is President of CRC Group’s Metairie, LA office.
  • Brad Wood is President of CRC Group’s Shreveport, LA office.