High auto insurance rates have been an issue in Louisiana for years, and the state is anything but proud of having the dubious distinction of the highest rates in the nation behind only Michigan. The average premium in Louisiana was $2,298 in 2018, more than 50% higher than the national average.
Solutions, though, have been harder to come by, and the debate has often focused on whether lawsuits filed by those who have been in accidents or the drivers themselves, are more to blame. Others think the real culprit lies elsewhere.
While the need for solutions to the state’s high auto insurance rates often gets the most attention during an election year, the issue is likely to stick around for a while, because lawmakers and business leaders — including those within the insurance industry — haven’t been able to settle on an approach that everyone agrees will bring those rates down.
How are Louisiana Lawmakers Trying to Reduce Auto Insurance Rates?
For the past few years, some members of the Louisiana legislature have focused on tort reform, or the idea of putting limits on lawsuits filed by people who have been in car accidents. Tort reform has been touted as key to lowering auto insurance rates, so lawmakers have proposed allowing these accident cases to go before a jury rather than just a single judge.
The idea is that attorneys would have to convince a larger group to award compensation to a car accident victim. The bills would also extend the amount of time people have to file lawsuits in the hope that it gives them more time to negotiate a settlement before going to trial.
So far, those bills haven’t passed, and opponents say those changes would unfairly deny plaintiffs the ability to collect the full compensation they’re owed after a serious accident. Critics also note that the insurance companies themselves have been unable to guarantee that tort reform would bring down high auto insurance rates.
Not everyone agrees that the high rates are caused by civil lawsuits. Several other factors have also been cited, including:
- Distracted driving
- DUI/DWI arrests
- Poorly maintained roads
Another factor is the high number of uninsured motorists in Louisiana, who simply can’t afford auto insurance policies and choose to forgo insurance altogether. It’s been estimated that nearly 14% of Louisiana drivers are uninsured and about 40% are underinsured.
Can More Competition Lower Auto Insurance Rates?
Another possible solution that’s been cited by some business and political leaders is competition. The more insurance companies that the state can attract in the future, the theory goes, the more competition that creates for the insurance providers already in Louisiana. And more competition can mean lower rates for everyone.
So far, the theory may be working. The state reported recently that more than 1.4 million customers of some of Louisiana’s major automobile insurers are now seeing lower rates. The reason is that these companies have been forced to compete for new customers. Three companies were cited:
- Louisiana Farm Bureau Casualty Insurance Co., which dropped its insurance rates by an average 4.4%
- Progressive Security Insurance Co., which cut its insurance rates by an average 2.2%
- State Farm which dropped its rates by 3.2%
Was direct competition a factor? State Farm had experienced a loss of 100,000 Louisiana policies over a two-year time period. Jim Donelon, the state’s insurance commissioner, said State Farm wanted to encourage more customers to come back, so they lowered their rates. Mark Cockerham, State Farm vice president-agency, said in a press statement that “Improving expenses and losses were important factors, among many, that supported our decision to make this rate change.”
In addition to saying more competition can help lower insurance rates, Donelon said an increase in distracted driving cases had contributed to insurance rates going up in recent years.
Experienced Louisiana Car Accident Lawyers Near You
Every moment wasted not contacting an attorney to help you with your car accident case is a potential dollar lost in your settlement, so it’s important to partner with a trusted attorney. In Louisiana, attorneys with E. Orum Young Law have decades of experience negotiating with insurers to reach fair settlements for their clients. E. Orum Young Law strives to handle all the complex legwork necessary to pursue a successful claim so you can focus on healing. We have more than 35 years of experience protecting Louisiana drivers and are ready to fight for you.