Louisiana Senate Bill SB509

Louisiana 2026 Regular Session

• Introduced: 3/31/26
• Refer: 4/1/26
• Report Pass: 4/22/26
• Engrossed: 5/6/26
• Refer: 5/7/26
• Report Pass: 5/19/26
• Enrolled: 5/28/26
• Chaptered: 6/1/26
• Passed: 6/1/26

Caption

INSURANCE DEPARTMENT: Provides relative to bank-owned life insurance. (8/1/26)

Summary

SB 509 amends Louisiana’s insurance law governing insurable interest to address bank-owned life insurance (BOLI). The bill adds a specific rule that a bank is deemed to retain its insurable interest in a former employee when the bank is exchanging one bank-owned life insurance policy for another. It also directs the insurance commissioner to establish the method and manner for obtaining consent for such exchanges. In setting that framework, the commissioner must consider whether the policy is funding employee benefits, any applicable consent requirements under existing law, cybersecurity controls, alignment with federal and interstate requirements, and continuity of coverage during the exchange. The bill is aimed at allowing banks to update or replace BOLI policies without losing the legal basis for coverage on former employees.

Impact

The bill amends R.S. 22:901(C)(2), which defines insurable interest under Louisiana insurance law. Its practical effect is to clarify and expand the circumstances under which banks may maintain coverage on former employees for purposes of policy exchanges, while giving the Department of Insurance authority to regulate the consent process and related safeguards. Banks, insurers, and employees covered by BOLI arrangements are the primary affected parties.

Sentiment

The bill appears to have been generally well received and moved with strong support overall. It passed the Senate unanimously on final passage, passed the House on final passage by a solid margin, and was concurred in by the Senate after House action. The recorded votes suggest broad bipartisan acceptance of the bill’s technical insurance-policy clarification.

Contention

The main point of contention appears to have been a proposed House amendment, which failed by a wide margin. While the bill itself ultimately drew broad support, the failed amendment vote indicates there was at least some disagreement over how the policy should be modified or constrained. Based on the text, likely areas of concern included the scope of bank authority, consent requirements, and the regulatory standards the commissioner should apply when approving policy exchanges.