Louisiana House Passes Bill Targeting High Auto Insurance Rates

By | April 26, 2019

A bill aimed at lowering Louisiana’s sky-high auto insurance rates has passed the state House of Representatives.

On April 23, House lawmakers passed HB 372, named the “Omnibus Premium Reduction Act of 2019, authored by Rep. Kirk Talbot. According to the bill, “motor vehicle accident claims comprise a major portion of the lawsuits filed in Louisiana’s state courts,” therefore driving up auto insurance rates. It proposes to lower the cost of auto insurance coverage by creating a legal environment that is less conducive to filing auto crash-related lawsuits.

HB 372 increases the window of time for filing lawsuits over car accidents from one year to two and reduces the threshold for a jury trial from $50,000 to $5,000. It also “provides for reduced damages for amounts paid or payable from collateral sources, and repeals the right of direct action against the insurer,” according to a Legislative abstract describing the bill.

The legislation is supported by business groups, including the Louisiana Association of Business and Industry, which calls the bill “the most important one we have seen for quite some time.” In commentary on its website, www.labi.org, the association wrote that the if the bill becomes law it “will implement long-needed and obvious reform to our legal system that will hopefully lead to better auto insurance rates for Louisiana individuals, families and businesses.”

The Advocate reported that opponents of the bill say HB 372 is overly insurer-friendly and that it “dramatically restricts car crash victims’ access to the courts.”

Louisiana Insurance Commissioner Jim Donelon has previously attributed rising rates in the state to more crashes and insurance claims, the greater expense of repairing vehicles that have newer, sophisticated technology, as well as high litigation rates related to auto accidents.

In August 2018, he formed the Louisiana High Auto Rates Task Force, with the aim of investigating the state’s auto insurance market and making recommendations to the Legislature for actions to lower rates.

Just this month, lower auto rates previously announced by State Farm went into effect in Louisiana. Donelon announced in February that more than one million policyholders in the state would see a decrease of 3.2 percent beginning in April. State Farm enacted two previous rate decreases within the past year: a 2.7 percent decrease for private passenger vehicles went into effect in July 2018 and a 1.8 percent decrease became effective in September 2018.

Donelon said in February that State Farm’s “decreases are directly attributable to competition in the auto insurance marketplace and again demonstrates that competition is truly the best protection for policyholders.” He added that State Farm’s actions “will pressure other insurers to take similar steps.”

The 2017-2018 Annual Report for the Louisiana Property and Casualty Insurance Commission (LPCIC) shows the average annual auto premium per vehicle in Louisiana is $1,921.

HB 372 was sent to the Senate for consideration.

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