Tort Reform Failure: Drivers to See Insurance Rate Hikes as High as 35%

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After making big tort reform promises, Donelon admits rates are rising

FOR IMMEDIATE RELEASE
February 22, 2022

Contact: info@realreformla.com

In case you missed it late last week, WDSU reported that auto insurance rates are increasing in 2022, according to Insurance Commissioner Jim Donelon. Some drivers are seeing rate hikes as high as 35%.

The hikes are more proof that the promises made by Donelon and Louisiana’s corporate lobbyists during the 2020 tort reform debate were false. Donelon said tort reform would lower rates by the end of 2020, while LABI president Stephen Waguespack said he’d go protest tort reform at the capitol if rates hadn’t gone down by June 2021. Tort reform passed, and our rates continue to rise.

The upcoming legislative session is expected to see a renewed push for real auto insurance reform, to stop insurance companies from using ridiculous non-driving factors like credit score and gender to overcharge good drivers. A recent Consumer Reportsstudy found that a wealthy person who has been convicted of DWI pays less for car insurance than someone with poor credit and a perfect driving record.

While our rates continue to go up, insurance companies are making billions in profit and giving tens of millions of dollars in bonuses to their executives.

See below for a statement from Real Reform Louisiana Executive Director Eric Holl

“Tort reform has proven to be an abysmal failure. Louisianans now have fewer rights if their insurance company refuses to pay, and all they’ve gotten in return is higher rates. It’s time to stop letting insurance companies and corporate lobbyists write our insurance laws. It’s time to pass real insurance reform to make insurance companies play by the rules.

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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.