Author: Danelle Heathman
Operating within Louisiana's dynamic marine and energy sectors demands a sophisticated approach to regulatory compliance, and the timeline to adapt has just grown incredibly short. For decades, the Louisiana Oilfield Indemnity Act (LOIA) has limited defense and indemnity provisions in covered oilfield agreements. They purport to protect an indemnitee against liability for death or bodily injury caused by the indemnitee's own sole or concurrent negligence or fault. To navigate these boundaries, companies have relied on the "Marcel Exception", allowing indemnity-backed insurance to remain valid if the insured procured and paid for additional insured coverage. The Louisiana Act 328 (HB 941) fundamentally changes the landscape of oilfield contract risk allocation, effective August 1, 2026.
Act 328 amends LOIA and codifies the jurisprudential framework established in Marcel v. Placid Oil Co. governing the enforceability of additional insured coverage in covered oilfield agreements. Traditional insurance archetypes and standard boilerplate agreements will no longer be sufficient to guarantee protection. For covered agreements entered into, renewed, or revisited after the Act's effective date, failing to align cacontracting and payment practices with the statute may jeopardize the enforceability of additional insured coverage sought. The time to review and restructure your contracts is right now.
Complying with the Louisiana Act 328
This new law amends the Louisiana Oilfield Indemnity Act and codifies a statutory framework for when Additional Insured coverage is enforceable in covered oilfield agreements. To maintain robust contractual risk transfer strategies, risk management and legal; teams must audit their workflows against three operational pillars mandated by Louisiana Act 328:
- Strict three-step procurement process
To ensure your additional insured coverage requirements are met under the new law, a party seeking coverage, whether for itself or for its broader corporate group, must carry out a sequential three-step process:
- Written request: You must submit a separate, documented request for an additional insured premium quote directly to the named insured, their insurance agent, or their broker.
- Formal quote: You must receive an explicit, documented premium quote directly from the named insured's insurance carrier or authorized representative.
- Direct payment: You must make a direct financial payment to the named insured's insurer or authorized representative corresponding exactly to that quoted premium amount. For group coverages, the premium must be explicitly quoted for the group, and your direct payment must match that specific group total.
It's important to note that coverage activates only after the additional insured directly pays the quoted premium, ensuring enforceable coverage.
- Mandatory renewal deadlines
Compliance is an active, annual obligation, not a set it and forget it task. Once coverage is active, the named insured or their insurer must provide the additional insured with a written renewal notice. The notice must be delivered either 30 days before the next annual premium is due or within 7 days of binding the renewal coverage, whichever timeframe is shorter. Crucially, if you failed to make the initial request or missed a payment in a prior policy year, the insurer is under no obligation to send a renewal notice, forcing your team to restart the procurement cycle from scratch.
- Capped deductible pass-throughs
The legislative changes fundamentally alter financial responsibility regarding risk retention. Under Louisiana Act 328, the additional insured is legally responsible for any applicable deductibles or self-insured retentions set forth in the policy, capped at a maximum of $100,000. Any agreement requiring the Named Insured to fund all or any part of the first $100,000 deductible or retention is void and unenforceable, and the statute's additional insured framework doesn't apply in that circumstance.
From compliance to a strategic advantage
Louisiana Act 328 transforms how the Gulf energy sector must approach master service agreements. Treating additional insured status as a mere administrative checkbox is a vulnerability of the past; today, it requires absolute financial and transactional precision.
To adapt to these energy sector regulatory updates without disrupting ongoing field operations, marine and energy companies should implement a proactive, structured response.
- Audit existing master service agreements (MSAs): Review all active MSAs and blanket contracts immediately. Ensure that any clause referencing deductibles, retentions, or insurance requirements aligns perfectly with the $100,000 statutory limit so you don't accidentally invalidate your protections.
- Re-engineer accounts payable workflows: Because the law mandates direct payment to the insurer or its authorized representative, standard invoicing workflows — where a subcontractor simply bills back an insurance line-item to the operator — are no longer compliant. Your procurement team must establish verified, direct transaction paths with the counterparty's insurance representative.
- Deploy digital tracking for notices: Given the condensed 7-day and 30-day renewal notification windows, risk managers should deploy automated tracking mechanisms. Missing a timeline could inadvertently sever the chain of coverage for the upcoming policy year.
Furthermore, companies must recognize the scope of Act 328 is broader than it may initially appear. The statute clarifies that LOIA applies to agreements pertaining to a 'well or wells,' reinforcing its applicability to multi-well operations rather than isolated, single-well activities. In addition, the statutory definition of covered operations uses "including but not limited to" language indicating that the listed oilfield activities are illustrative rather than exhaustive. As a result, courts may interpret the Act to apply across a wider range of services connected to exploration, development, and production activities, depending on the specific factual nexus to a qualifying operation.
Gallagher Can Help
As your consultative partner, our deep experience in marine and energy risk management enables us to guide you through the complexities of regulatory compliance, including the Louisiana Oilfield Indemnity Act.
We work alongside your legal and risk management teams to review your current counterparty insurance programs, audit ongoing MSAs for compliance alignment and restructure transactional workflows to ensure premium payments are handled perfectly under the new statutory guidelines. By partnering with us, you can confidently protect your capital, stabilize your operational relationships and ensure your risk transfer strategies remain sound in Louisiana and beyond.
Contact us today to speak with a Gallagher representative and develop a plan in response to this new legislation.
