Louisiana law allows insurance for punitive damages. This is wrong, and bad, and it should stop.
I'll accept that Louisiana is unlikely to have a lot of case law on this issue because punitive damages are now limited to driving under the influence and child pornography - not really the hotbeds of appellate jurisdiction. But general maritime law applies the law of the adjacent state in the absence of controlling maritime law, so it matters a lot to marine insurance.
I'll also accept that, absent the maintenance and cure context where decisions are more often made with an eye toward their likely consequences, the insurability of punitive damages is not likely to affect conduct significantly. If suddenly punitive damages are insurable and companies have such cover, they are, I suspect, not much more likely to act recklessly. Reckless conduct often enough has a built-in penalty in the form of a likelier accident. (With regard to M&C, insuring punitive damages would certainly make companies more willing to face the consequences of denying M&C. Whether that's good or bad depends on your stance.)
But punitive damages should be uninsurable because insuring them undercuts the whole purpose: to punish. If insurance is had, punishment will not be had. And the second effect of insuring punitive damages is a likely erosion of the "gross negligence" or "arbitrary and capricious" standard. If the judge knows she or he is soaking an insurer, she or he is more likely to find punitive damages, for a broader range of conduct, and to blur the line between punitive and compensatory. It's hard to see how much good is done there.
To put it in Kantian terms, we punish crimes not just to obtain justice against the criminal, but also to re-establish the moral world, and to tell the world that the criminal conduct was wrong. We want not just to punish wrongful conduct, but to be seen punishing wrongful conduct. Conduct warranting punitive damages is a world apart from criminal conduct, of course, but it is also supposed to be a world apart from ordinary negligence. Negligence is understandable; arbitrary or gross negligence shocks the conscience enough that we seek to punish the company - not just for the benefit of the plaintiff, but because we want to tell the world such conduct will not be tolerated. (In a number of jurisdictions, punitive damages go in part to the state precisely because they aren't meant to compensate the plaintiff, so the plaintiff has, it is thought, a thin claim to them.) If punitive damages are insured, we're not telling the world that we're punishing culpable conduct. We're telling people that it's a business transaction. That shouldn't be.