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HB 604 is a complicated, expensive cure that's worse than the disease

HB 604 by Representative Ray Garofalo requires the Louisiana Department of Insurance to establish and maintain a registry of umpires for property insurance claims, which would create an extraordinarily complex and difficult process that costs storm victims more money and makes it harder for them to rebuild their lives.

There are legitimate concerns regarding qualifications and availability with appraisers and umpires. Unfortunately, HB 604 is a cure worse than the original disease. This bill permits insurance companies to force policyholders into complicated binding agreements that policyholders must navigate on their own or spend money they do not have to enlist the services of an attorney.

HB 604 also creates conditions that are highly susceptible to corruption. Consumers could be significantly disadvantaged by allowing an elected official, like the Insurance Commissioner, who receives contributions from the insurance industry, to establish and maintain a registry of umpires who will issue binding decisions on disputed claims in which insurance companies have a financial interest.

“HB 604 exacerbates the problem it seeks to solve,” said Ben Riggs, executive director of Real Reform Louisiana. “It binds policyholder’s hands with mounds of red tape, forcing them to navigate a difficult and expensive process resulting in a binding decision issued by an umpire appointed by the Insurance Commissioner. Louisiana needs real insurance reforms that benefit consumers by strengthening policyholders’ rights, lowering costs, improving transparency, and making it easier for homeowners and small businesses to resolve their property claims."

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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.