State lawmakers took another step on what Republican leadership has said is a quest to lower Louisiana’s auto insurance rates.
On Friday, three legislative committees again convened to hear testimony related to factors contributing to the state’s notoriously high rates.
It was the third in a series of monthly meetings planned to run through December. It is expected to result in a package of auto insurance-related legislation that could be taken up in a special session next year.
Rep. Gabe Firment, R-Pollock, who chairs the House Insurance Committee, said in a statement he believes the meetings “will result in a comprehensive package of bills that can bring stability and competitiveness to the automobile insurance market in our state.”
Insurance industry representatives and advocates presented data Friday to the House Insurance Committee.
Inflation in the wake of the COVID-19 pandemic and higher repair prices due to more advanced technology in cars have contributed to spikes in insurance rates since 2020, said Robert Hartwig, a professor of practice focused on insurance at the University of South Carolina, who also spent nearly two decades working for the Insurance Information Institute, an industry trade association.
Hartwig also said catastrophic weather events like hurricanes and floods impact how often auto insurance claims are made.
“Carriers are not making a profit in the state of Louisiana,” said Matthew Byrd, a lobbyist for Metairie-based Gray Insurance, who provided testimony on commercial auto insurance.
“As losses increase, premiums increase,” Byrd said. “Only a reduction of severity or frequency (of losses) or both can impact rates.”
In the context of insurance, severity refers to the monetary cost of a claim, and frequency refers to the number of insurance claims.
Byrd also said Gray Insurance needs to operate outside of the state in order to make up for its losses inside of Louisiana.
Looming over the discussion of what, exactly, is driving the state’s high auto insurance is the perennial and nationwide conflict over what insurance and business interests often call “tort reform.”
The tort reform debate pits business and insurance companies against personal injury attorneys, often referred to as trial lawyers or plaintiffs’ attorneys.
While businesses seek to limit how much they have to pay when sued over injuries, personal injury attorneys, who stand to make money from successful cases, argue they represent clients who deserve just compensation for harms suffered.
Gov. Jeff Landry this year signed into law a number of measures backed by the insurance industry.
But Landry also vetoed a key measure the industry sought, which would have placed greater limits on how much people who sue can collect in injury and damage claims. The move, while expected, still drew condemnation from business interests and insurers.