Louisiana companies facing rising costs for vehicle insurance in recent years have been raising their voices in favor of legal reforms to fight excessive litigation, which they see as essential to making the state’s business climate more friendly.
“In the last maybe six years, the effective rate to insure a commercial vehicle has basically doubled,” Ben Heroman, treasurer of the family-owned Billy Heroman’s Flowerland Inc., told the Louisiana Record. “... It’s increased from four to eight grand.”
The Baton Rouge-based florist business, which has a fleet of 40 delivery vehicles, has seen its vehicle insurance costs rise by about $160,000 over that time, according to Heroman, who attributes the rising business costs to inflation, the state’s current legal climate and the impact of damages awards on insurance costs and business operations.
Groups such as the Louisiana Association of Business and Industry (LABI) and the National Federation of Independent Business (NFIB) last month applauded the passage of legal reforms in the state’s House of Representatives, saying that litigation trends in Louisiana have throttled businesses’ bottom line.
“We’re grateful to the members of the House who stood up for small businesses by voting for these important reforms,” NFIB State Director Leah Long said in a prepared statement. “High insurance premiums and an unpredictable legal climate have long made it harder for small business owners to grow and create jobs. These bills will help restore balance to our civil justice system and make Louisiana a more competitive place to do business.”
The bills that were sent over to the state Senate for consideration include House Bill 34, authored by Rep. Brian Glorioso (R-Slidell), which would limit medical damages in personal injury cases to the actual amount paid rather than the billed amount; HB 431 by Rep. Emily Chenevert (R-Baton Rouge), which would limit damages recovery if the plaintiff is 51% or more at fault for an injury; and HB 435 by Rep. Peter Egan (R-Covington), which would place a $5 million cap on general damages in civil cases.
“I’ve gone into each (legislative) session optimistic or hopeful that they would find ways to make reforms,” Heroman said. “... There is a good slate of reform bills; and to hear that the House passed a number of them does increase my optimism. But that’s not the endgame yet.”
He stressed that even if lawmakers pass significant legal reforms this year, there will be a lag time before that will translate into changes in the legal climate.
The company has worked hard to operate its fleet of delivery vehicles safely, according to Heroman, but future insurance rate hikes could force the firm to make difficult decisions.
“If we saw outrageous increases, we would have to make decisions accordingly, which might be not to expand the fleet, not give raises or not give benefits,” he said.
Higher insurance costs make it more difficult for existing businesses in Louisiana to operate or for new businesses to move into the state, according to Heroman. But he said lawmakers have demonstrated that they can address problems with sensible solutions.
Heroman pointed to how the Legislature in 2021 moved to pass a bill allowing civil juries in injury cases to be told whether or not a plaintiff was wearing a seatbelt. In turn, jurors can now take this into account when they determine fault between the parties. That was an example of a common-sense law, he said.
But Heroman also expressed concern about trial attorney influence on the actions of elected officials in Louisiana.
“The trial attorney lobby is strong and spends a lot of money,” he said. “... That is a concern for me in the way that it affects all the politically elected officials involved.”