Lawsuit Abuse Awareness Week, which is observed in Louisiana and other regions of the U.S. during the first week of October, this year highlighted the need for more legal reforms in Louisiana at a time when the cost of property insurance is ballooning.
This week, the Louisiana Department of Insurance (LDI) approved Louisiana Citizens’ requested 63% rate increase on residential property insurance starting in January – a jump in premium costs that LDI said was due mainly because of the cost of reinsurance. Industry observers have cited the impact of recent powerful hurricanes as well as the state’s legal climate for increased insurance costs.
By law, the nonprofit Louisiana Citizens must maintain rates at least 10% above the highest qualifying market rate in each parish – or 10% above the actuarial rate.
Lana Venable, executive director of Louisiana Lawsuit Abuse Watch (LLAW), noted that as a result of hurricanes such as Laura, Delta, Zeta and Ida during the past two seasons, several insurers have had to leave the Louisiana market while other companies have been burdened with increased costs. Homeowners in need merit compensation as a result of storm damage, Venable said.
“Unfortunately, there is some concern about overzealous firms, including out-of-state law practices new to the Louisiana market, utilizing aggressive marketing tactics that promise large settlements before talking with policyholders or reviewing claims,” she told the Louisiana Record in an email. “These unrealistic expectations will likely result in increased litigation and add to the time and cost to resolve the claims of those who have already been through so much.”
LLAW urges Louisianans to work to reduce excessive civil litigation in the state by serving on juries when summoned, understanding their rights under the law and thinking critically when hiring an attorney or considering a lawsuit. In addition, more legislative reforms are needed as the state deals with coastal erosion lawsuits, car insurance fraud and judicial misconduct, Venable said.
Insurance Commissioner Jim Donelon also cited the need for legislative action to help lower property insurance rates.
“My staff and I are working with the Legislature to attract more insurers to the state through the use of a program that was highly effective following hurricanes Katrina and Rita, which will give Citizens policyholders, and all Louisianans, more and cheaper insurance options in the private market,” Donelon said this week in a prepared statement.
Excessive tort litigation in Louisiana causes a hit to the state’s economy amounting to nearly $4.7 billion, according to a recent report by The Perryman Group for the group Citizens Against Lawsuit Abuse.