NEW ORLEANS – Before introducing Tim Temple, the Louisiana Commissioner of Insurance, BGR President and CEO Rebecca Mowbray kicked off the Sept. 18 BGR Breakfast Briefing by flagging 2 upcoming BGR Reports:
- the proposed Bond Issue impacting over $500 million and earmarked to fund things like affordable housing, infrastructure and drainage projects; and
- the proposed Charter Change examining whether the City Attorney should operate with greater independence from the mayor’s office in providing legal advice and representation.
Temple: What is Insurance?
Introducing the Insurance Commissioner, Mowbray mentioned the rising costs and lack of availability of insurance as common reasons why the region’s residents leave Louisiana.
“There are differences in opinion in Baton Rouge about whether to give insurers more flexibility to respond to changes in the market or whether to get tough with them. As a result, Louisiana may be sending mixed signals about where it’s going with its legislation.”
Temple, who has held the position of Louisiana Commissioner of Insurance since Jan. 2024, said the current situation is “the worst insurance crisis our state has ever faced.”
He started his talk by defining what insurance is and what it is not. “It’s a promise. It’s not a pitch. It’s a promise to pay claims when you have them. It’s a transfer of financial risk to a company in exchange for a premium.”
Temple said insurance is also an industry that employees tens of thousands of people. “This year the Department of Insurance is going to collect over $1.4B in premium tax. About half is from healthcare premiums and the other half is from property and casualty.”
But insurance is not a maintenance policy for a home and it’s not an investment policy or savings account, Temple said. When someone waits for a storm to replace their old roof, everyone pays, he said.
Legislative Reforms Starting to See Results
Temple said that the state made legislative changes to address regulatory issues, legal challenges and consumer protection, and that these changes are starting to see results. “Since the beginning of 2024 we’ve had a dozen companies either come back to Louisiana or new ones have come and companies that were already doing business here have added capacity to the state. One particular syndicate allocated over $200M more capacity last year in the commercial space,” said Temple.
“As of last month, the average statewide premium rate increase was 1.8%,” said Temple. While it is still an increase, the rate of increase has slowed. In 2024 the increase was 6%, in 2023 it was 12%, and it was 16% the year before that, he said. “Over 8 times now insurance companies have taken a rate decrease this year,” said Temple.
“People are starting to see premium relief. It’s not everywhere and it’s not across the entire state, but it is starting to work and I anticipate that we will continue to see that.”
Why Are Louisiana Car Insurance Premiums Higher?
At the end of July 2024, legislative leadership decided to hold 14 hearings to examine cost drivers of insurance premiums to determine why claims in Louisiana are more expensive than here than in other states.
“We don’t have more auto accidents than the national average,” said Temple. “Our vehicles, when they are damaged, do not cost more to repair than they do in other states. When we get into an accident, we file twice the number of bodily injury claims. Twice.”
He said Louisiana claimed on average 64,000 claims per year for the last ten years. “And when we file those bodily injury claims, we litigate at 3 times the national average,” said Temple. “Those are the cost drivers for the state of Louisiana.”
According to the latest data, Louisiana had 66,000 bodily injury claims filed for a population of 2.4 million licensed drivers in the state. Compared with Alabama, which is comparable with 3 million licensed drivers, had 34,000 bodily injury claims. “They have half a million more drivers but half the bodily injury claims as Louisiana,” said Temple.
“If Louisiana wants to see auto premiums like our neighboring states, then we need to get our claims down,” said Temple. “The new legislation was designed to address frivolous, excessive claims being filed.”
FORTIFIED Roof Program
Another 500 FORTIFIED Roof Program grants were approved this year, with just under 4,600 people who have applied this year in addition to the 10,000 who are already in line for the benefit.
“The FORTIFIED Roof Program is the long-term solution to more affordable insurance in Louisiana,” said Temple. “It’s the long-term solution to attract more companies to come and write property policies in Louisiana.”
Temple sought to allocate funding for the FORTIFIED Roof Program so that there is a dedicated, permanent fund for it. A portion of the funding comes from taxes and a portion from fees on the insurance industry. “From those two streams we will now have somewhere between $27-$30M each year to fund the FORTIFIED roof program,” said Temple. “This created predictability and stability in the funding of that program.”
There is currently a tax deduction that homeowners can access. “If you choose to put a FORTIFIED roof on yourself, prior to this year you could claim up to a $5,000 tax deduction,” said Temple. “The legislature increased that to $10,000.”
Temple said the FORTIFIED Roof Program has been in effect for 2 years. “As of the end of last month, we have 3,800 FORTIFIED roofs on in Louisiana,” he said. “People are getting discounts from their insurance companies as a result of those roofs.”
