Louisiana ranked among the five most expensive states for the purchase of business-use vehicle insurance in a recent study, adding to a rising chorus of criticism about the cost of auto insurance premiums in the state.
CarData Consultants Inc. earlier this summer released a list of the five states where insuring employees who use their cars for business activities is the costliest. The annual cost of such insurance has averaged $2,454 and can exceed $3,000 in New Orleans in some circumstances, the analysis found.
The New York-based company attributed Louisiana’s high insurance costs to poorly maintained roads, frequency of natural disasters and the ability of plaintiffs to sue insurance companies directly.
The company’s conclusions dovetail with trends insurance officials have seen in Louisiana, according to Jeff Albright, chief executive officer of the Independent Insurance Agents & Brokers of Louisiana.
“The National Association of Insurance Commissioners (NAIC), which is probably the best authority on these types of things, ranked us as the second highest private passenger auto insurance in the country for last year,” Albright told the Louisiana Record.
Statistics about civil litigation show why premium costs in Louisiana often surpass those of other states, he said. Accident frequency and the property damage claim rate are close to the national average, according to Albright, but the state has 60 percent more civil litigation and injury awards that are 56 percent more than the national average.
“The biggest reason that our insurance rates are so high is because of our tort legal system,” he said. “... It’s way out of line with the national statistics.”
Civil litigation reforms that were enacted this year will eventually help to bring premiums down, but it may take two to three years for residents to feel the impact, according to Albright.
“I think it’s going to help,” he said. “I think additional reforms are going to be needed in the future, but this is a really good first start to bring us in line with the rest of the country.”
The reforms won’t take effect until Jan. 1, and most of the insurance cases that will be litigated next year involve incidents that occurred prior to the reforms being passed, according to Albright. So they will be adjudicated according to previous legal standards, he said.