Will Louisiana’s Senate Address the Insurance Crisis?


Has your home and auto insurance skyrocketed in recent years? You are not alone. Louisiana is in the midst of an insurance crisis. Homeowners are paying more than twice the national average to protect their properties, while drivers are spending more of their incomes on auto insurance than any other state in America. Making matters worse is the fact that insurers are fleeing the state’s market at an alarming rate. According to the Louisiana Department of Insurance, more than 20 companies have left the state since 2020, forcing hundreds of thousands of families to pay higher premiums or go without coverage.

What’s driving the insurance crisis? How are our elected leaders working to address it? What can you do about it? Read on to learn more.

The Insurance Crisis

Make no mistake: insurance availability and affordability are severe problems for individuals, families, and businesses across Louisiana.

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National rankings show our drivers pay an annual average of $3,618 for auto insurance. That equates to roughly 6.5% of average household income, making Louisiana the least affordable state in the country. For comparison, drivers across the US spend about 3.41% of their income on a full-coverage car insurance policy. That translates to $212 monthly, while those with minimum coverage pay around $62 monthly. Louisiana drivers haven’t seen rates that low in a long time.

Meanwhile, on the property insurance side, Louisiana homeowners typically shell out $1,992 annually for home insurance, as reported by Quadrant Information Services. That’s more than 39 percent above the national average. Even homeowners with good credit scores and clean claims histories have experienced a 10 percent increase in premiums since 2021.

What’s driving our auto and home insurance rates through the roof?

According to a report from the Insurance Research Council published in December 2023, affordability challenges stem from many factors. The frequency of significant weather events, which often trigger extensive legal battles in their wake, contribute to the problem. Spiraling expenses in auto repairs and construction exacerbate the situation. According to the Insurance Information Institute, insurers paid over $23 billion in over 800,000 claims filed from hurricane activity during 2020 and 2021.

Further aggravating and undermining the sustainability of  Louisiana’s insurance market is the state’s legal climate, which seems to encourage excessive and sometimes meritless litigation. Ranked second worst in the nation by the US Chamber Institute for Legal Reform (ILR), Louisiana has a longstanding reputation as one of the worst states to be sued. “With over-the-top plaintiffs’ lawyers and unfair courts, it’s not surprising that Louisianans are paying an outrageous amount to support the state’s lawsuit system, including sky-high insurance premiums,” said former ILR CEO Harold Kim.

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Time for tort reform?

According to a recent report by the American Tort Reform Association (ATRA), Louisiana witnesses soaring rates of attorney advertisements, notably in television promotions for legal services. In the final quarter of 2020 alone, Louisiana attorneys poured an astonishing $12.4 million into legal service advertisements and claims solicitation across the state.

These challenges precipitated the insolvency of several insurers and prompted the exit of crucial insurance providers from the market. In fact, between July 2021 and February 2023, twelve insurers providing coverage in Louisiana went bankrupt, while many more stopped writing new policies or were forced to abandon the state altogether.

This lack of competition, combined with increasing costs due to inflation and excessive litigation, drives up insurance prices for consumers far beyond the affordability threshold.

The Roadmap to Reform

Since taking office in January, Louisiana’s new Insurance Commissioner, Tim Temple, has wasted no time laying out a “roadmap of solutions” to address the insurance crisis.

“If immediate action is not taken during the upcoming legislative session, at a time when insurance is clearly the top concern for Louisianans, the economic harm will be irreparable for decades.”

Commissioner Temple wrote that in a column published in the Times-Picayune earlier this year. Vital elements of Temple’s reform agenda include:

  • Securing a long-term, sustainable funding source to strengthen the Louisiana Fortify Homes Program, which grants up to $10,000 for homeowners to upgrade their roofs to standards set by the Insurance Institute for Business & Home Safety.
  • Implement regulatory adjustments to offer clearer guidance to insurers and consumers regarding the department’s interpretation and enforcement of laws and regulations. This includes reducing fines for insurers that voluntarily report and rectify minor infractions and granting insurers greater flexibility in adjusting rates to mitigate risks effectively.
  • Proposing legislation to streamline and inject more transparency into the claims process, to speed up the payment of claims for consumers, and to reduce the frequency of lawsuits filed against insurers operating in good faith.

Failure to Act

While most of Commissioner Temple’s legislative reforms have been welcomed with open arms by Governor Jeff Landry and a bipartisan majority of state lawmakers, a crucial part of his agenda hit a snag in the Senate Judiciary A Committee last week. Despite two lengthy (and contentious) hearings, HB336 and HB24 remain stuck in committee without a vote, while HB423 made it out with hostile amendments.

Three reform bills are stalled in the senate

HB336, by Representative Emily Chenevert (R 6/10), is a straightforward disclosure bill that seeks to create transparency around using third-party financing agreements by plaintiffs’ attorneys involved in civil lawsuits. This shady and mostly unregulated industry is undermining the integrity of our legal system, encouraging frivolous lawsuits, and driving up insurance costs.  Under current law, these clandestine legal financing agreements allow outside entities, such as hedge funds and foreign governments, to invest in lawsuits and influence legal proceedings in our courts. The lack of transparency around third-party litigation financing is so troubling that some have even described it as threatening our economic stability and national security — HB336 seeks to change that.

HB24, sponsored by Representative Michael Melerine (R 7/10), aims to eliminate a unique legal doctrine created by Louisiana courts. Known as the Housley Presumption, this doctrine relieves plaintiffs in personal injury cases from having to prove direct causation between an accident and an alleged subsequent injury. This legal loophole sets Louisiana apart from most other states and drives up insurance costs for everyone. We took note of this bill back in February when it was filed. Based solely on the potential impact of this bill, Melerine received an instant upgrade in his scorecard.

Meanwhile, Rep. Melerine’s HB423 aims to enhance Louisiana’s collateral source laws, focusing on increasing transparency of medical billing. This reform targets one of the most significant factors contributing to the escalating litigation costs in Louisiana. Current law prevents essential information from being shared with juries about how much a plaintiff has paid in medical expenses. HB423 seeks to change that so more accurate information can be communicated to juries. If passed in its original form, without the hostile amendment added in the Senate Judiciary A Committee, HB423 would also make all recoverable past medical expenses discoverable and prevent the awarding of excessive “phantom damages.”

Commissioner Temple’s statement on these stalled reforms

Commenting on the Senate Committee’s handling of these crucial reform bills last week, Commissioner Temple issued the following statement:

Anyone who owns a vehicle in our state knows Louisiana’s private passenger and commercial auto markets are in crisis. The Senate Judiciary A Committee has now heard testimony twice on several bills in my auto insurance reform package, including HB 336, HB 423, and others.

While some individual members have supported the legislation, the Judiciary A Committee has so far chosen to oppose or water down the bills to the point of uselessness. I urge the members of this committee to support comprehensive auto insurance reform in the same way both chambers of the Legislature have shown support for property insurance reform.

Let me be clear: If these auto insurance reform bills don’t move to the floor where the full Senate can debate them, our best chance for improvement in the auto market will have been killed in the Senate Judiciary A Committee.

Why on earth would the Committee want to kill these crucial reforms and essentially condemn Louisiana residents to continue paying some of the highest insurance rates in the country? Let’s take a closer look.

Senate Judiciary A Committee

Comprised of seven members that are assigned by the President of the Senate, the Senate Judiciary A Committee is responsible for considering proposed legislative instruments that encompass a wide range of subject matter. These include state laws, including any proposed changes to the Louisiana Code of Civil Procedure, and civil procedure generally. Currently, the Senate Judiciary A Committee consists of four (4) Republicans and three (3) Democrats:

Interestingly, all three Democrats are trial lawyers by trade, as is the Chairman. Perhaps this is why the Committee seems to be an instrument of the plaintiffs’ bar. Historically, trial lawyers have opposed efforts to inject transparency and balance into Louisiana’s court system. Presumably, they are the primary beneficiaries of the broken legal system we all pay for now. In fact, we received a letter towards the end of last year responding to an article we published by Representative Chuck Owen (R 9/10) regarding sacred cows. The letter disagreed slightly with Rep. Owen because Owen failed to mention one of Louisiana’s most significant sacred cows – lawyers!

The Status Quo Cannot Continue

Are we really going to allow three trial lawyers on the Senate Judiciary A Committee to kill Louisiana’s best chance of getting insurance rate relief this year?

Given the clear mandate for change that voters expressed at the polls last fall, the status quo cannot continue.  It is past time for this committee to prioritize the needs of their constituents over the interests of the trial bar. Bold, decisive action should be taken now to address the insurance crisis.


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