Jim Donelon

Insurance Commissioner Jim Donelon at the Press Club of Baton Rouge on Monday, Sept.16, 2019

Though many policyholders already are aware, Insurance Commissioner Jim Donelon told a task force Monday that auto insurance rates have gone up since a new law went into effect that limits access to the courts and was sold with the promise of lowering the rates.

“Oh okay, and rates are going up, this year, actually, 2% to date, through October,” Donelon told the Affordable Automobile Insurance Task Force. “But for the three years before this year? Flat even, zero.”

Late Monday night, Donelon's office wrote in an email that the actual increase was 0.7% for the first 10 months of 2021. The Louisiana Department of Insurance reviews and tracks rate filings by the companies.

The task force was established to see how the new “tort reform” regime impacted the cost of insurance that is necessary for people to drive legally. It met once in September 2020 and again Monday – for a total of less than five hours – before adjourning without issuing any recommendations.

The Civil Justice Reform Act made several technical changes in the state’s courts long sought by business and insurance communities claiming Louisiana’s civil justice system promoted the lawsuits that helped drive up insurance rates to some of the highest in the nation. But judges, lawyers and medical providers countered that significant harm to civil jurisprudence would be caused by the changes wanted, including stressing the resources of the courts, limiting injured individuals’ recoveries, and slowing resolutions of cases – all without any guarantee that insurance rates would fall.

Promoters the complicated changes in the court system as a way to lower premium costs, which is easier to understand. The legislation became law on Jan. 1.

“It’ll be fairer to look next year,” said state Sen. Kirk Talbot, the River Ridge Republican who chaired the task force and drafted a tort reform bill that was vetoed in 2019.

Talbot argued that because tort reform only went into effect a little more than 10 months ago, cases stemming from wrecks after Jan. 1 haven’t had a chance to make it through the system.

“There haven’t been any trials,” Talbot said, repeating an argument that other supporters have used.

“I had one last week,” Jackson said. “The courts have been open for a year.”

The scoop on state politics in your inbox

Get the Louisiana politics insider details once a week from us. Sign up today.

“We’re here to look for affordable automobile insurance ideas,” said Robert Kleinpeter, a member of the task force and a Baton Rouge lawyer who represents people filing lawsuits seeking recompense for injuries received in accidents. “I’m trying to connect the dot that we have some problem in Louisiana that is unique that we can somehow move to the auto insurance premiums that we can decrease. As I understand it, we don’t have any silver bullet we can do that we’re not doing.”

Though prices have increased since the 2020 legislation by House Speaker Clay Schexnayder, R-Gonzales, became law, Donelon said the price of insurance had been flat for the past three years but showed an increase during the previous three years. He attributed the upward trajectory to a dramatic increase in fatal accidents nationally.

More strongly built automobiles with air bags, seatbelts with shoulder harnesses, had led to a steady drop in the number of wrecks in which people died. But that trend changed as more accidents are being caused by drivers distracted by cell phones and other gadgets in vehicles.

Donelon said it’s national trend and carries some responsibility for the higher rates.

“I’m starting to hear a trend here, and maybe it’s just me, but a lot of the factors whether there’s an increase or decrease are national factors,” state Sen. Katrina R. Jackson, D-Monroe. “And so with all these national factors, I am not hearing tort reform mentioned.”

Louisiana allows 667 companies to sell insurance. Of the 348 companies that write policies insuring vehicles, 285 of whom sell only commercial auto policies, which is something of loss leader in this state. Companies selling private passenger policies make money in Louisiana, he said.

The Civil Justice Reform Act lowered the “jury threshold” – the amount sought that triggers having a jury decide rather than a judge – because the threat of a jury trial, and how long it takes, would incentivize more settlements. HB57 sets rules and procedures for demanding a jury trial, including requiring a cash bond for the party requesting one.

The new law also repeals the two sentences in state law that forbids using failure to wear seatbelts as a way to reduce what is owed for injuries caused in a car wreck. Whether the injured person was wearing a seatbelt now would be allowed into the trial. And the legislation also would forbid the mentioning of the defendant driver’s insurance company and policy except at the beginning and end of the trial. Insurers argue that juries tend to render higher awards when they know that an insurance company will be paying, instead of an individual.

Email Mark Ballard at mballard@theadvocate.com.

Tags