Illuminator: La. auto insurance rates likely won’t drop this year despite tort reform promises

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Critics say lobbyists designed new law to cater to corporate interests

It’s unclear when or if auto insurance rates in Louisiana will ever decrease as predicted by business lobbyists and state Insurance Commissioner Jim Donelon last year when they presented lawmakers with sweeping tort reform legislation. That legislation gives insurance companies an edge against accident victims in lawsuits.

The tort reform, presented in May as House Bill 57 by House Speaker Clay Schexnayder, was signed into law July 13 as the Civil Justice Reform Act of 2020. The legislation received backing from mostly Republicans, as well as the insurance industry and the state’s largest lobby group, the Louisiana Association of Business and Industry. It was opposed only by Democrats.

The act is designed to lower the amount of money insurance companies are paying to accident victims through Louisiana court judgments. Those savings, as argued by insurance lobbyists and the politicians who backed the legislation, will then trickle down to policyholders by way of reduced auto insurance rates.

READ THE REST OF THE STORY AT LAILLUMINATOR.COM

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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.