More than 1.4 million customers of some major automobile insurers across Louisiana are seeing lower rates as the companies compete for new business and to retain market share, but the state remains among the most expensive nationally for auto insurance.

Louisiana Farm Bureau Casualty Insurance Co. is the most recent company deciding to drop its insurance rates — by an average 4.4 percent. That's a decline of $11.7 million in premiums across more than 220,000 policy holders, taking effect on Aug. 1 for new and renewing policies.

Meanwhile, Progressive Security Insurance Co. expects to trim its insurance rates by an average 2.2 percent — a drop of $10 million in premiums — across nearly 177,000 auto policy holders. That decision is expected to take effect on June 28.

Louisiana has the second-highest auto insurance rates in the country, according to Insure.com. The average premium in Louisiana was $2,298 in 2018, which is more than 50 percent higher than the national average. Local leaders even brought together a task force to study why Louisiana has such high auto policy rates and suggestions to change that reality.

The task force subcommittee sought to address the litigious nature of insurance accident claims in the state and suggested reforms such as limiting general damages to $500,000, but it was later determined by the committee to have little impact since few private passenger claims are settled for $500,000 or more. Another task force remedy suggested was to lower the $50,000 jury trial threshold which could offer a premium savings up to half a percent for the insurance company. In mid-May, a bill which sought to lower insurance rates in Louisiana failed in a Senate committee. 

State Farm, with about one-third of the private automobile insurance market in the state, led the shift toward lower rates. In February, State Farm announced its rates were going down by 3.2 percent, affecting more than 1 million policy holders. That’s a dip of $48 million in insurance premiums, but it’s a trade-off the company appears willing to make. The company collected $525 million in direct premiums in Louisiana in 2018 for private passenger auto physical damage insurance and reported $307 million in direct losses that same year.

“Improving expenses and losses were important factors, among many, that supported our decision to make this rate change,” Mark Cockerham, State Farm vice president-agency, said in a news release at the time. The change took effect in April for new and renewing policy holders.

Jim Donelon, insurance commissioner for Louisiana, called the change spurred by State Farm “competition at work.”

State Farm had seen a loss of 100,000 policies in Louisiana over a two-year time frame and wanted to entice customers to return, Donelon said.

“They want market share back, so they lowered their windstorm deductible down from 5 percent to 2 percent. They did it to compete for those 100,000 policies (they lost) because they bundle auto and homeowners policies to make it more attractive,” he said.

State Farm's rate reduction was its third in about nine months time, totaling a drop of 7.7 percent. The decreases came after State Farm had raised rates by an average of 13.5 percent in 2017, and by 8 percent the year before.

Donelon previously told The Advocate that insurance rates had risen in recent years due to the increase in distracted drivers and therefore more crashes. Also, a recovering economy and cheaper gasoline had increased the volume of vehicles on the road, which leads to more insurance claims. He also had said last year that automakers are installing more technology, which may make repairs more costly, in addition to lawsuits filed after accidents.

Not all insurers find Louisiana an attractive market and some aren't following the trend to lower rates.

Farmer Insurance dropped out of the state in 2013. At the time, the company had about 7,000 auto policies and 23,000 homeowner policies.

Some insurers are trying to increase their respective rates for personal automobile policies. 

Allstate submitted to the state a proposed 4.7 percent increase in insurance rates in April, which was listed as pending. That rate hike would impact nearly 134,000 policy holders across the state and generate $17 million in premiums for the business. Likewise, Geico Casualty Co. increased its rates by 0.03 percent, which impacted 61,127 customers in March.

Commercial auto policy rates increased across the board in Louisiana as well. 

Progressive had the largest market share for commercial policies in Louisiana with less than 10 percent of the market and $11.3 million in direct premiums. Progressive Paloverde Insurance Co. had its 4.4 increase in commercial auto rates denied by the state on June 12, which would have impacted 10,442 policy holders.

The last time State Farm changed its commercial automobile insurance rate was in December 2017, when it increased the rate by 5.7 percent, which impacted 11,136 policy holders at the time. Allstate sought an increase of 19.9 percent in its commercial auto policy rates, which would affect 2,218 customers.

When asked whether insurance companies are taking a cut on consumer rates while largely increasing commercial rates, Donelon suggested those decisions are not made together. 

“I don’t think there is a connection between the two because they are priced separately by different companies,” he said.

Acadiana Business Today: Despite rate cuts for 1.4 million Louisiana drivers, state still among most expensive in U.S.; Temporary drainage tax may be headed to Lafayette Parish voters

Follow Kristen Mosbrucker on Twitter, @k_mosbrucker