Louisiana businesses hammered by insurance costs are hopeful that the Louisiana Association of Business and Industry’s campaign to bring more insurers back into the state will lead to economic benefits, LABI reports.
The association’s letter-writing campaign to 1,100 auto insurance companies comes in the wake of the state approving a major tort-reform bill, HB 57, designed to reduce frivolous lawsuits against insurers and other businesses.
“Both LABI and our coalition partners have received great encouragement from businesses of all sizes and industries from across Louisiana,” Stephen Waguespack, LABI’s president and CEO, told the Louisiana Record in an email. “They’re excited to see that we’re out actively marketing the state to insurance companies. Our business owners are on the front lines of Louisiana’s insurance crisis every day and know that a competitive marketplace will bring them lower rates.”
HB 57 will reform the civil litigation landscape by making changes such as lowering the monetary threshold to hold a jury trial from $50,000 to $10,000 and awarding medical costs based more in line with the amount paid rather than the amount billed.
But just when the reforms will produce significant reductions in premiums seems to be a subject of debate. Louisiana Insurance Commissioner Jim Donelon earlier this month approved a rate decrease of 2.3 percent for Progressive Insurance Group and a 7.5 percent reduction for the Louisiana Farm Bureau Group. Both reductions take effect Oct. 1.
“These rate decreases are further proof that increased competition in the state’s auto insurance market is continuing to bring about savings for our policyholders,” Donelon said in a prepared statement. “When we see rate decreases from one of our top 10 companies, it usually isn’t long for the rest to follow suit.”
Waguespack points out that many insurers this year have cut rates due to people driving less as a result of the coronavirus pandemic.
“But we believe that the steps the legislature took to pass these substantive legal reforms should be incredibly encouraging to insurers, and we hope that they’ll keep their rates low and continue to bring them down once these laws go into effect on Jan. 1, 2021,” he said.
Some in the insurance industry say it could take two to three years for the court system to respond effectively to the legal reforms and have a significant impact on insurance premiums.
Currently, Louisiana’s accident rate is comparable to the national average, but lawsuits are filed 60 percent more often in the state, according to the Independent Insurance Agents & Brokers of Louisiana.