Provides relative to institutional advertising expenses

House Bill 612 amends Louisiana's insurance rate regulation statutes to expand the prohibition on advertising expenses in rate-setting. The bill modifies R.S. 22:1452(C)(7) to remove the word "institutional" from the definition of "expenses" that insurers must exclude from rates, thereby prohibiting all advertising expenses rather than only institutional advertising expenses. Concurrently, the bill amends R.S. 22:1454(B)(3) to replace the phrase "institutional advertising expenses" with "advertising expenses," broadening the restriction on what insurers may consider when determining rates. The bill repeals R.S. 22:1452(C)(9.1), which contained the prior definition of institutional advertising expenses.

Insurers operating in Louisiana will face stricter constraints on incorporating advertising costs into their rate calculations under this legislation. Previously, insurers could exclude only institutional advertising from their rate base, potentially allowing other forms of advertising expenses to factor into premium determinations. The expanded prohibition prevents any advertising expenditures from being considered in the rate-setting process, which may affect how insurers structure their operational budgets and allocate costs between advertising and other expense categories that remain permissible in rate calculations. Insurance consumers may benefit from this change if it results in lower premiums by preventing advertising costs from being passed through to policyholders.

This amendment operates within Louisiana's broader insurance rate regulation framework established under the Insurance Code's Subpart provisions governing rate adequacy and discrimination. The existing statutory scheme requires that rates not be excessive, inadequate, or unfairly discriminatory, and permits consideration of enumerated expense categories in achieving these standards. By narrowing the permissible expense base, the bill strengthens the regulatory protection against what the legislature has determined to be costs that should not be subsidized through insurance rates. The change is consistent with the regulatory principle that rates should reflect only legitimate business operating expenses necessary to provide insurance coverage and servicing.