Lower insurance rates coming soon

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The House voted 72-28 Friday to pass a bill that aims to lower car insurance rates in Louisiana by limiting damage suits and awards to people injured in car accidents.

The bill by Sen. Kirk Talbot, R-River Ridge, targets tort laws that Republicans say make it too easy to sue and claim damages after a car accident.

The Senate also has passed the bill, and it will go next to Gov. John Bel Edwards. He supported an alternative approach to lowering insurance rates and has said he might veto the bill.

Legislative leaders were negotiating Friday with his aides about the terms of the bill, which passed both chambers by large enough margins that the Republicans could override a veto. The legislative session ends on Monday, and the issue could stretch into a special session scheduled to start immediately afterward.

Louisiana drivers pay the second highest auto insurance premiums in the country after Michigan, and Republicans and the business lobby blame the state’s tort laws and legal climate.

Talbot’s bill focuses on four key components. The bill would decrease the monetary threshold for an injury claim to be decided by a jury rather than a judge. It would prohibit plaintiffs from suing insurance companies directly and increase the time parties have to file lawsuits to encourage settling out of court. It also would prohibit using evidence of a plaintiff receiving reimbursements for healthcare costs from sources besides the defendant.

Supporters of the bill say that judges, who are elected, receive major donations from plaintiff’s lawyers and are more likely than juries to award significant damages. They also say that Louisiana is one of the few states where injured people can sue insurance companies directly. Changing these laws would encourage more insurance companies to write policies here, they say, increasing competition and lowering rates.

The bill also would allow juries to hear whether someone injured in an accident was wearing a seatbelt or not. Introducing such evidence is not currently allowed under Louisiana law.

Republicans say that these changes would decrease insurance premiums for private vehicles by at least 10% and possibly up to 25% in some cases. However, if an insurance company can prove that a 10% reduction would lead to insolvency, it could be exempt from lowering its rates.

“There are no guarantees, but it’s my firm belief we’ll see reductions in rates if we pass this bill,” said Rep. Ray Garofalo, R-Chalmette, the author of a nearly identical bill on the House side.

But Democrats maintain that there is not enough evidence that rates would decrease. They say the bill does not mandate a rate reduction and would make it harder for injured people to receive fair compensation.

“These are pretty massive changes to our civil justice system that are based on pretty much a guess,” said Rep. Mandie Landry, D-New Orleans, during a committee hearing on the bill.

Opponents expressed worry that the bill could overwhelm courts with jury trials and make it more difficult to find jurors. But Talbot said he had not found any evidence of that happening in other states.

Democrats asked if the possible law could be repealed if rates are not reduced after a certain number of years. But Republicans rejected their request.

“Are y’all willing to wear it if it doesn’t bring down rates?” Rep. Robby Carter, D-Amite, asked Republican lawmakers.

Democrats attempted to lower Louisiana’s high car insurance rates by addressing how insurance companies determine premiums. Sen. Jay Luneau, D-Alexandria, filed a series of bills that would have prohibited insurance companies from setting rates based on credit score, age, gender and other demographics. His bill was killed in committee. Edwards supported Luneau’s approach.

During last year’s election, Republicans won enough Senate seats to reach a supermajority, but fell just short of a supermajority in the House. Talbot’s bill passed in both chambers by enough votes to override a possible veto by the Democratic governor if the same number of legislators were to vote to override one.

One way or another something needs to be done.

Christopher Drew

Director, LSU Manship School Statehouse Bureau

Fred Jones Greer Jr. Endowed Chair in Journalism

Manship School of Mass Communication

Louisiana State University