R Street Lauds Louisiana Lawmakers for Passing Auto Insurance Reform Bill

July 1, 2020

The R Street Institute, a non-profit public policy research organization based in Washington, D.C., says the Louisiana Legislature’s passage of a bill aimed at lowering high auto insurance costs represents a positive direction for insurance markets in the state.

R Street said HB 57, passed June 30 by both the House and Senate, represents a compromise approach to tort reform intended to curb legal costs in the state’s auto insurance market.

HB 57 retains several provisions of an earlier bill, SB 418, which passed during the regular legislative session but was vetoed by Gov. John Bel Edwards. Most notably, HB 57 will lower Louisiana’s threshold for jury trials, currently the highest in the nation, from $50,000 to $10,000, according to the research organization.

Under the current $50,000 threshold, 53 percent of auto claim disputes in the state are heard before elected judges, providing opportunity to shop for favorable venues for frivolous cases, according to R.J. Lehmann, R Street’s director of finance, insurance and trade policy.

R Street also praised the passage by the Louisiana House of Representatives of HR 36, a resolution that calls for the House Committee on Insurance to study whether the state commissioner of insurance should be an appointed position, rather than an elected one.

“We have long held that insurance regulation is a technical matter that should be overseen by professionals, not politicians,” Lehmann said in a prepared statement. “The history in Louisiana of three successive insurance commissioners who ended their terms in prison is ample evidence of the dangers of politicization.”

In Gov. Edwards SB 418 veto message, he stated that “that not a single insurance company testified in committee that (the bill) would actually reduce rates. … Further, the rate reduction provision in the bill is permissive, rather than mandatory, and actually allows for rate increases if the insurers are able to demonstrate one would be needed.”

Source: R Street Institute

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