Louisiana Moves Forward with Auto Insurance Reforms

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Lawmakers in Louisiana debate crucial auto insurance reforms during a legislative session.

News Summary

The Louisiana state legislature has approved several bills aimed at reforming auto insurance in response to rising rates. Key proposals include rate regulation, tort reform, and empowering the insurance commissioner to reject excessive rate filings. Governor Landry supports these reforms, which aim to enhance transparency and reduce costs for consumers. However, dissent from Insurance Commissioner Tim Temple highlights the complexities in regulating insurance practices. With nearly 40% of Louisiana’s auto insurance costs exceeding the national average, significant changes could impact both consumers and insurers in the state.

Louisiana – The state legislature is moving forward with multiple bills focused on reforming auto insurance, in response to escalating rates and varying perspectives among stakeholders. The proposed legislation addresses crucial aspects such as rate regulation, tort reform, and the authority of the insurance commissioner.

On May 21, the Senate approved House Bill 148, which grants the insurance commissioner the power to reject excessive rate filings and mandates public disclosure of these filings. Governor Jeff Landry has expressed his support for the bill, asserting that Louisiana’s insurance financial results are relatively better than those observed in states like Florida and Texas.

However, Insurance Commissioner Tim Temple has voiced his disagreement with HB 148, arguing that profit assessments are not solely reliant on loss ratios and warning of potential instability in regulatory practices if the bill passes. The House is scheduled to consider the bill for concurrence on May 27.

In addition to HB 148, the House has passed several tort reform bills designed to address concerns with insurance costs, including:

House Bill 434: This bill raises the recovery limit for medical expenses incurred by uninsured drivers from $15,000 to $100,000.
House Bill 450: Plaintiffs would be required to establish a direct link between their injuries and the accident.
Additional proposals include barring drivers found to be 51% at fault from seeking damages and allowing the disclosure of actual medical expenses paid instead of merely billed amounts.
A bill aimed at restricting undocumented immigrants from recovering damages is also under consideration.

Commissioner Temple has indicated that a reduction in litigation is essential for lowering costs and premiums for insurers, suggesting an alignment with Governor Landry’s focus on tort reform.

These proposed reforms represent the most significant changes to Louisiana’s auto insurance laws in over 20 years. A separate initiative to transform the insurance commissioner’s role from an elected position to an appointed one has not progressed and was not intended as a critique of the current commissioner.

Louisiana is currently home to one of the highest average annual auto insurance costs in the U.S., which is reported at $1,588 per vehicle. This figure is nearly 40% above the national average. Contributing factors include a high incidence of bodily injury claims, a significant rate of uninsured drivers—approximately 14%—and the complexities within the state’s legal system regarding personal injury claims, all of which exacerbate insurance costs.

Governor Landry’s legislative efforts aim to enhance transparency within the rate-setting processes of insurers, reflecting an ongoing tension between trial lawyers and business interests over insurance litigation and related expenses. Lawmakers have pointed to the necessity of addressing these rising costs, which profoundly affect many families in Louisiana, a state characterized by a lower median household income.

While several bills have successfully passed through the House, some were modified or “watered down” in the Senate, illustrating the intricate negotiations involved in the reform of the state’s insurance landscape. The outcome of these legislative efforts could have significant implications for both consumers and insurers in Louisiana moving forward.