Some observers of Louisiana's auto insurance market are raising concerns that last year’s Civil Justice Reform Act has yet to put downward pressure on the state’s auto rates, which one consumer website recently found is the highest in the U.S.
In a recent survey, Insure.com found that the average annual auto insurance premium in Louisiana now tops $2,800, which is nearly twice the national average of $1,428. In addition, Louisiana’s average rate shot up 19% over the past year, compared to a 6% decrease for the national average.
But Jeff Albright, chief executive officer of the Independent Insurance Agents & Brokers of Louisiana, said more time is needed before the effects of the Civil Justice Reform Act, whose provisions took effect in January, can be evaluated. The accident claims that are filed after Jan. 1 have to be allowed to go through the settlement process, with many of them then litigated in court and facing appeals, according to Albright.
Independent Insurance Agents & Brokers of Louisiana Chief Executive Jeff Albright
“It’s going to take a couple of years for these cases to get through the courts, and then it’s going to take another year or two for the insurance companies to determine what the impact on the overall claims experience has been,” he told the Louisiana Record. “So it’s way too early to be expecting that that reform would have reduced auto insurance rates, and the people that are bringing into question the reforms are the people who opposed the reforms to begin with.”
The latest Insure.com data, which was published in August, indicates that Louisiana’s auto insurance rates may be the result of many factors, including population densities, the number of uninsured drivers on the road, severe weather and litigation costs.
But Albright put the blame squarely with the state’s legal system. The uninsured motorist rate in Louisiana is on par with other states, at 12% to 15%, he said, and property claims are only slightly higher than the average of all 50 states.
“But our bodily injury experience is twice as bad as the national average,” Albright said. “... The only conclusion you can come to is that Louisiana is more litigious and awards more damages and bodily injury than other states. That’s why the bodily claims experience is so bad.”
The reform measure passed last year, which was authored by House Speaker Clay Schexnayder, aimed to reduce the amounts insurers pay accident victims through state court decisions. The reforms are expected to lead to more jury trials to evaluate claims, allow into evidence information about whether injured parties were wearing seatbelts and limit medical expense amounts in certain instances.