The start of Louisiana’s legislative session has rightly centered on the state’s insurance market, which has been plagued by massive losses, litigation, and bruising rate increases. Gov. Jeff Landry, Insurance Commissioner Tim Temple, and legislators have made tackling this crisis a priority.
Florida has been cited by all sides in the debate on how to approach this issue. As a tropical peninsula jutting 500 miles into warm, hurricane-prone waters, Florida is no stranger to fluctuations in the insurance market. Our experience – in what to do and what not to do – can be a model in insurance reform.
First, what not to do: In response to skyrocketing insurance rates after Florida’s devastating 2004 and 2005 hurricane seasons when seven hurricanes battered most of the state, lawmakers enacted reforms that imposed de facto price controls on the market and leveraged the state-run insurer of last resort (Florida Citizens) to artificially suppress rates. A tax was levied on companies’ “excess profits,” and auto insurers were required to sell property insurance coverage if they did so in other states.
The result: Many private insurers left Florida and hundreds of thousands of policies migrated en masse to state-run Florida Citizens, which was hugely undercapitalized. For a time, we were one bad hurricane season away from bankrupting the state.
In addition, for almost two decades, Florida’s insurance market was increasingly plagued by fraud and excessive litigation stemming from the exploitation of legal loopholes. While lawmakers enacted minor reforms around the margins to address specific abuses, they mostly kicked the can down the road and failed to enact major changes to bring fairness and balance to our legal system. The issue festered to such a point that in 2020, Florida accounted for only eight percent of insurance claims, but 76 percent of all insurance litigation nationwide, which propelled double-digit rate increases for both home and auto insurance premiums each year.
That brings us to what Florida did right.
Between 2021 and 2024, lawmakers finally enacted a slew of major reforms that removed incentives for frivolous litigation. These changes included:
A change from pure comparative fault to a modified standard;Medical transparency reform to eliminate phantom damages and require only actual paid medical damages are admissible in court;Disclosure of third-party medical financing, including letters of protection;Elimination of one-way attorney fees for all lines as well as the elimination of Assignment of Benefits;Significant improvement in bad faith laws; andPremises liability reforms.
Critics of legal reform and those who profit off the current system claim these changes did nothing to improve insurance rates in Florida.
But the data tell a different story. Insurance litigation in Florida is down by about 30% from two years ago and, importantly, a dozen new insurers have entered the state. Since January 2024, 19 companies have filed for a rate decrease and 37 companies have requested no premium increases.
Other critics claim the reforms have caused an avalanche of claims denials and other misbehavior on the part of insurers. The data don’t support this claim either. Just last week, Florida’s Office of Insurance Regulation (OIR) reported that its “enhanced data reporting does not support [the] narrative” with, for example, 41% of denials from the recent hurricane stemming from claims below deductible levels.
Simply put, legal reform works, and the data from Florida make that clear.
Louisiana today appears to be in a similar place to Florida’s experience after catastrophic 2004 and 2005 hurricane seasons. The question at hand: what solutions will Louisiana adopt to address its current crisis? The lessons learned from Florida can and should serve as a guide.
