October 16, 1998

INSURANCE INFORMATION NOTICE NO. 99-5

SUBJECT: DEPARTMENT PREMIUM CREDITS OR PENALTIES

Senate Bill No. 116 of the First Extraordinary Session of 1998 (copy attached for easy reference), authorizes the Office of Risk Management (ORM) to apply a five percent (5%) credit to premiums for those agencies which have undergone a loss prevention audit by ORM and have received a credit certification as provided in Louisiana Revised Statute 39:1536(B). If the agency fails to receive certification by the Loss Prevention Unit, it shall be liable for a penalty of 5% of the agency's total annual self-insurance premium paid per line of coverage. All agencies within a department must receive certification in all lines of insurance coverage for the department and each agency to qualify for the reduction of premium. This statute exempts the road hazard and medical malpractice coverages. ORM will notify the agency at least sixty (60) days prior to assessing the penalty. This will be implemented in Fiscal Year 1999-2000.

The ORM Loss Prevention Unit will audit each agency every three (3) years, with a recertification review performed annually. Again, each agency within each state department must pass the audit in order for the agency to be certified and receive the credit. If one agency in a department fails the certification, all other agencies within that department will pay the 5% penalty. If you have any questions, please contact Doris Copeland at (225) 342-8479.