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What the Special Insurance Session means for Real Reform Louisiana

January 31, 2023

During October’s joint session of the Louisiana Legislature, Insurance Commissioner Jim Donelon admitted failure in regulating the insurance companies incentivized by a Katrina-era program. Now, in order to provide some relief to our ongoing insurance crisis, we’re one day into a special session of the state legislature where a similar program is likely to be funded.

Donelon has made clear that we must fund this incentive program. Thanks to the budgeting of Gov. John Bel Edwards we have the funds to do so without raising taxes or cutting services - but we need to work toward a long term solution for real insurance reform - when it doesn’t come at an additional cost to the taxpayer.

Donelon created this mess by allowing failing companies to qualify with low standards. Higher standards and better regulation must be put in place to ensure Louisiana does business with providers committed to Louisiana, providers who will treat people with dignity and take on the risky policies all too common in our state.

With the devastation of the storms in 2020 and 2021 and the state of homeowners insurance where it is throughout the state, action is needed now. Donelon has forced our leaders' hands, so if the new program doesn’t result in insurance rates going down & the number of new carriers going up, he should be on the hook for the tab.

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Insurance Industry: "Credit Scores" Among Reasons for Louisiana's Rising Insurance Costs.

By Ben Riggs • 16 Feb, 2024

Insurance Industry: "Credit Scores" Among Reasons for Louisiana's Rising Insurance Costs. A new report shows that auto insurance rates are skyrocketing, rising by 26% across the U.S. On average, Louisiana drivers pay $2,909 annually, roughly 6.53% of their income for auto insurance. Wayne Watley at Watley Insurance Group lists “credit scores” among the reasons for Louisiana’s rising auto insurance costs, including poor roads and uninsured motorists. Mr. Watley goes on to say, “It’s a challenge because we’re not one of the richest states, but we have some of the highest premiums.” He is correct—and the data backs him up. Insurance companies use credit scores to determine insurance rates for policyholders. Louisiana ranks 48th in median household income and 49th in average credit score . According to a recent study , safe drivers in Louisiana with poor credit pay 111% more than safe drivers with excellent credit ($1,505 / $713). Consequently, Louisiana has the second-highest auto insurance rates in the nation, which leads to more uninsured motorists, another primary cause of higher insurance rates. The use of credit scores in rate setting also creates perverse incentive structures that make Louisiana roads less safe. In Louisiana, safe drivers with poor credit pay an average of $905 more than drivers with a DWI and excellent credit ($3,548 / $2,643). Meanwhile, traffic fatalities increased by 21% from 2019 to 2022 in Louisiana, and the fatality rate per 100 million vehicle miles traveled increased by 18%, according to KPLC . Louisiana desperately needs real insurance reforms that lower costs, protect consumers, hold insurers accountable, and make our roads safer.