New state law increases cost of buying auto insurance _lowres

Advocate staff photo by HILARY SCHEINUK -- North and southbound traffic on Bluebonnet backs up at 5:45pm, Thursday, July 30, 2015, in Baton Rouge.

An innocuous bill got an expensive hitchhiker during the 2015 session of the Louisiana Legislature: a fee increase generating $21.8 million for State Police operations that some say will add to the cost of buying car insurance.

The rider allowed the Office of Motor Vehicles to increase by $10 the cost of a report on a person’s driving record from $6 to $16.

Reports are obtained by insurance companies every time a person buys automobile insurance to see if the individual has any tickets or accidents. About 2.18 million requests are filed annually.

Commissioner of Insurance Jim Donelon said the new fee is going to increase the cost of getting insurance in a state that already has the second or third highest automobile rates in the nation.

“The insurance companies are going to pass that cost on to the consumer,” said Jeff Albright, chief executive officer of the Independent Insurance Agents and Brokers of Louisiana.

The Legislature overwhelmingly approved the legislation and Gov. Bobby Jindal signed it into law.

The fee increase got added to a bill by state Rep. Steve Pugh, R-Ponchatoula, as State Police searched for funding options to replace transportation trust fund dollars, which were being taken away. Legislators wanted trust fund dollars to go to state infrastructure needs, rather than state troopers.

Pugh’s original House Bill 448 dealt with laboratory certification of individuals doing chemical testing for suspected DWIs. It added to the list of organizations from which certificates would be accepted. The House approved it 96-0.

But when the bill came up in the Senate Transportation Committee, it was quickly amended at the request of State Police Col. Mike Edmonson to increase the fee for the motorists’ vehicle record report.

Pugh said the $16 fee allows the Office of Motor Vehicles to cover more of the costs of providing the reports. “It costs $22 to produce it,” he said.

“In talking with the insurance commissioner’s office, they said it would not have that big of an impact,” Pugh said. He said the fee, which went into effect July 1, would help State Police make up for lost transportation dollars.

Baton Rouge insurance company owner Gene Guffey called the $10 fee increase an “outrage.”

“It’s just a little computer print-out,” Guffey said.

Guffey said people already are struggling to pay insurance premium costs. “They are sneaking a rate increase on us,” he said.

Guffey has emailed legislators, including Pugh, asking what were they thinking.

Besides insurance companies, Guffey said banks, loan companies and anyone who sells a car also are impacted.

Donelon said a large number of policies are written directly by insurance companies, such as the Progressive Group of Insurance Companies, which does half its business through a toll-free line.

Some companies require their agents to pay and collect the expense from their customers, Donelon said.

Albright said the cost can get expensive. “It was $6 and now its $16 and you have two or three drivers that’s $16 times two, three or four,” Albright said. “A big company fleet can have 10, 20 or 30 drivers.”

“It’s got to be paid by somebody and at the end of the day the somebody is the consumer,” Albright said.

Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage of the state capitol, follow Louisiana Politics at