Louisiana Insurance Regulator Takes Action Against Texas Law Firm: A Deep Dive into the Fraudulent Hurricane Claims

Louisiana Insurance Commissioner Issues Cease and Desist Order

Louisiana Insurance Commissioner Jim Donelon recently issued a cease-and-desist order against a Houston-based law firm, McClenny, Moseley & Associates, accusing it of fraud involving potentially hundreds of hurricane-related claims in the state. Donelon stated that the firm filed more than 1,500 hurricane claim lawsuits in Louisiana over the span of three months last year, a practice he described as 'like nothing I’ve seen before.'

Impact of Hurricane Activity on Louisiana's Insurance Market

The Louisiana property insurance market has been deteriorating since the state was hit by record hurricane activity in 2020 and 2021. Insurers have paid out more than $23 billion in insured losses from over 800,000 claims filed from these two years of heavy hurricane activity. The largest property-loss events were Hurricane Laura (2020) and Hurricane Ida (2021). This has led to 11 insurers being declared insolvent and many others withdrawing from the market or stopping new business in hurricane-prone parishes.

Comparison with Florida's Insurance Crisis and Recommendations

While Louisiana's troubles parallel those of Florida, there are significant differences. Florida's problems are largely rooted in decades of legal system abuse and fraud, whereas Louisiana's have had more to do with insurers being undercapitalized and not having enough reinsurance coverage. However, it now appears some trial attorneys are trying to take a page out of the Florida playbook by engaging in litigation abuse against Louisiana property insurers. To protect yourself from such fraudulent practices, always ensure you are aware of who is representing you and verify any claims or lawsuits filed on your behalf.