Over the last few days, The Advocate’s op-ed pages aired, in two columns, the view that the high price of auto insurance has everything to do with people injured in accidents and their lawyers, but neither column showed even a shred of concern about the behavior of the insurance companies that charge these high rates. Insurers, we are supposed to believe, are innocent bystanders to the disastrously high auto insurance rates facing Louisiana drivers.
As a consumer advocate, I’ve studied auto insurance companies for 20 years, and they should not be given this free pass.
But it’s not just newspaper columnists. Louisiana lawmakers and the state insurance commissioner have also tiptoed around the insurers, apparently afraid to offend them, let alone call them to account for the prices they charge. As a result, when lawmakers and the commissioner proposed their so-called insurance rate reform bill last spring, they had to sheepishly admit that it wouldn’t actually lower rates. But, of course, you can’t address high rates if you refuse to take on the companies that are charging them.
Earlier this year, I tested dozens of auto insurance premiums throughout the state, and I found that folks with perfect driving records would often be charged hundreds and sometimes thousands of dollars more because they had a blue-collar job instead of a white-collar job, or a high school diploma not a college degree, or because they were single, divorced, and even widowed instead of married. And if you don’t have an excellent credit score, guess what? Your auto insurance skyrockets.
When Consumer Reports magazine studied Louisiana auto insurers, it reported that a good driver in the state with a low credit score paid $905 more per year on average than a driver with a high credit score and a drunken driving conviction!
State law requires every driver to buy auto insurance, so elected officials have a special obligation to make sure the companies are charging fair and reasonable rates in the market as a first step to reform.
The insurance industry and its supporters in newspaper columns and the State Capitol want us to believe that someone, anyone, else is to blame for the price it costs to insure a car. Policymakers who want to make a real difference, though, are going to have to stand up and give the insurance companies a talking to, instead of just being their mouthpiece.
Consumer Federation of America