Louisiana Lawmakers Pass Auto Insurance Reform Bills

By | June 17, 2024

Louisiana lawmakers passed a series of auto insurance reform bills that aim to bring availability and competition to the market by cutting down on excessive verdicts and settlements.

Legislators passed four bills endorsed by Insurance Commissioner Tim Temple that he says will allow Louisiana to compete with other states in attracting insurance companies to write commercial and private auto business. The bills await Gov. Jeff Landry’s signature.

HB 337, sponsored by Rep. Jack McFarland, prevents insurers from being named initially in lawsuits involving an injured person in a car wreck. Known as the Direct Action bill, the law would keep plaintiff attorneys from knowing how much liability insurance is involved in a case until a second lawsuit.

The bill will force juries to determine what the actual losses in a case are “without knowing that there’s a $2.5 million liability policy in the wing that could be claimed up to the max amount,” said Clyde Bohne, principal at Preferred Insurance Agency of Louisiana and chair of the Governmental Affairs Committee for PIA of Louisiana.

Louisiana was one of only three states that allowed insurers to be named directly in initial lawsuits, said Temple.

“What we’re trying to do is address where we’re an outlier. When this bill become law, it will bring Louisiana kind of back to the mainstream,” Temple said. That’s what we’re doing when it comes to what’s often referred to as tort reform, or I prefer to say legal reform.”

Another bill, HB 423, limits trial damages to the actual medical expenses of the injured party. The law, sponsored by Rep. Michael Melerine, provide for limitations of the amount of medical expenses paid by collateral sources.

Prior to 2020, Louisiana allowed 100 percent of the billed medical expenses amount to be collected if successful in litigation.

“This year’s bill was designed to help to continue to reduce that unnecessary expense,” Temple said.

The bill provides admissibility for an invoiced amount so that a jury and a judge would be able to see what was billed versus what was actually paid. A judge and jury currently only get to see what is invoiced.

SB 84, introduced by Sen. Alan Seabaugh, cuts down on one-way attorney’s fees. Known as the offer of judgment bill, and based off a law in Florida, the bill directs if a final judgment is in favor of a defendant and is at least 25 percent less than the offer of judgment, the defendant is entitled recover attorney’s fees and costs from the plaintiff.

“This would resolve current imbalance in the law, encourage early settlement within a reasonable range and aligns Louisiana with other states,” Temple said.

HB 315, sponsored by Rep. Mike Johnson, defines a two-year prescriptive period for tort claims. The bill states that when damage is caused to immovable property, the two-year prescription commences to run from the day the owner of the immovable acquired, or should have acquired, knowledge of the damage.

Proponents of the bills say they will bring transparency to the legal process, entice insurers to write more auto business in the state without the threat of burdening litigation.

Topics Auto Legislation Louisiana

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Insurance Journal Magazine June 17, 2024
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