NEW ORLEANS – On May 28, Governor Jeff Landry signed several tort reform Bills into law designed to address Louisiana’s auto insurance environment in which bodily injury claims are nearly twice as frequent and about 59% more costly than the national average. The Bills require plaintiffs to prove their injuries resulted directly from the accident,
NEW ORLEANS - On May 28, Governor Jeff Landry signed several tort reform Bills into law designed to address Louisiana’s auto insurance environment in which bodily injury claims are nearly twice as frequent and about 59% more costly than the national average.
The Bills require plaintiffs to prove their injuries resulted directly from the accident, prevent uninsured drivers from claiming medical expenses under $100,000, and prohibit damage awards to drivers found to be at least 51% at fault.
"Today, we’ve taken steps to shield Louisianans from frivolous lawsuits driven by trial lawyers—using a data-driven strategy. And we made it clear to insurance companies that they must answer to their policyholders," said Governor Jeff Landry.
House Bill 148
One of the Bills, House Bill 148, expands the Insurance Commissioner’s power to control insurance rate increases considered excessive. But some say this Bill is intended to inappropriately shift the blame for Louisiana’s high insurance rates.
“This is a clever political trap for the commissioner set by the Governor,” said Ryan Daul, a 25 year veteran of the insurance industry and past president of the Professional Insurance Agents of Louisiana. “Insurance prices cannot be arbitrarily suppressed.”
According to Daul, insurance pricing must reflect expected losses calculated by actuaries using data from previous years. If insurers aren't allowed to do this fundamental structuring, their business becomes unviable.
“I think Governor Landry is smart enough to know that this is not a workable solution,” said Daul. “I think he also realizes that Tim Temple is not going to use this new power, and it will allow the Governor to say, “Not my fault, I gave him the tools, now let’s get rid of elected commissioner and have an appointed one.” Then he tells the appointed commissioner to set a low rate and it cripples the insurance industry in Louisiana.”
“With the exception of HB 148, the bills signed into law today are significant steps that Louisiana has taken toward achieving meaningful legal reform,” said Temple at the signing event, but he also said “…passing HB 148 was a mistake that destabilizes our market and threatens to neutralize—if not outright reverse—the progress we’re making on fixing the homeowners and auto insurance crisis in Louisiana.”
A Cultural Problem
Gov. Landry has stated that Louisiana’s litigiousness is a cultural problem. House Bill 439, currently under consideration in the Senate Judiciary Committee, would cap attorney contingency fees at 10% for the first $15,000 recovered in personal injury claims, but for amounts above $15,000, it would remain unrestricted.
“I think the Governor is correct that it’s a cultural problem. To their credit, plaintiff attorneys have used advertising to train our citizens to bring a lawsuit regardless of the merits,” said Daul. “It’s important to bring balance back to our judicial system in the state. The way we do that is through legislation that takes away the incentive for attorneys to sue. If you remove the incentive from the process, aka the money, then the number of suits and the value of judgements would both decrease.”
In Daul’s opinion, while Gov. Landry is trying to lower rates, he’s focusing too much on the insurance companies without disrupting the current legal climate.
“The insurance companies are already losing money here. It won’t take much squeezing for them to call it quits – either by leaving or becoming insolvent,” said Daul. “Our plaintiff attorneys are too good and they’ve broken the system. We have to change the legislative rules to bring the system back into balance.”
Daul says that legislators like to blame corporate greed for the current situation but that this stance does not explain why Louisiana in particular is exhibiting it.
“Are insurance companies three times ‘greedier’ in Louisiana than they are in Texas and Mississippi and basically every other state?” asks Daul. “Did insurance companies just determine that a poor state like Louisiana is the place to try to get more money? Do they think we’re just too stupid to figure it out? Or did they base their rates on prior losses and determine that they can’t stay in business if they don’t make a profit?”
Increased Competition
A small number of insurers dominate the Louisiana market. Following the 2020–2021 hurricane seasons (Hurricanes Laura, Ida, Delta), more than two dozen insurers became insolvent or left the state, shrinking the pool of available providers.
Regulatory uncertainty, high loss ratios, and litigation risk deter new insurers from entering. Many major national carriers either limit their exposure in the state or avoid it entirely.
“Short term and long term, the only thing that truly changes our insurance market (homeowners or auto) is competition,” said Daul. “The only way you get competition into the state is to give them a stable environment to invest their capital.”
If more carriers can be attracted to Louisiana, the competition will increase the competitiveness and make it a more robust market.
“Every vote made on a legislative bill should be judged on whether or not it helps to create a competitive insurance marketplace,” said Daul.
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