(The Center Square) — Everyone in Louisiana is able to agree that the cost of insurance is too much to bear, but a sizeable rift has emerged on where to place the emphasis of addressing the crisis.
The rift has pitted Insurance Commissioner Tim Temple against Gov. Jeff Landry along with several legislators from both parties.
Among the questions asked by lawmakers: Are insurers making too much money in Louisiana or not enough? Does the insurance commissioner have the authority to deem a rate excessive? Can insurers conceal information that the insurance commissioner needs to regulate those insurers?
Temple and Landry have opposite answers to these questions, as do many legislators.
Landry has assumed a position that argues insurers are making too much money and testified Wednesday morning in favor of a bill which would allow the insurance commissioner to determine an insurer’s rates to be excessively profitable.
“Insurance companies continue to report record profits, while our rates continue to rise,” Landry told the House Insurance committee.
Temple said in a recent news conference that 40 commercial auto insurers have left the state, stopped or limited writing policies.
“For-profit companies don’t stay away from markets where they can make a profit,” Temple said. “Insurers certainly would not stay out of Louisiana if they were making the billions of dollars that some are suggesting they are making.”
Still, Louisiana’s largest auto insurer is reporting some $600 million in profits, collecting about $1.6 billion in premiums and spending over $1 billion on claims. However, this doesn’t include operational expenses, most notably salaries. According to IBISWorld, State Farm employs 67,000 people.
The bill in question, House Bill 576, would repeal the current distinction between competitive and noncompetitive insurance markets and give the insurance commissioner broader authority to reject rates deemed excessive, inadequate, or unfairly discriminatory — regardless of market conditions.
Temple made it clear that he did not support the bill and has previously testified against such a law.
“If insurance companies were profitable, they would be writing policies in the state,” Temple told Sen. Jason Hughes, D-Orleans, at a March Senate Insurance committee.
Temple also says that he already has the authority to deem a rate to be excessive, another point that he and Landry disagree on.
Claire Lemoine, an attorney at the Department of Insurance made clear at the Senate Insurance hearing that the commissioner already has authority to reject rates in competitive markets if they are unfairly discriminatory. According to Lemoine, that determination hinges on whether the rate is actuarially justified based on the risk being covered.
“If a rate is too high, then it’s not actuarially justified,” Lemoine said, adding that under Title 22, the department’s actuary can also consider whether the projected profit is reasonable — something they already do as part of the review process.
Hughes wasn’t convinced and no common ground was reached.
“The senator is trying to suggest that if i don’t like the rates, I can just arbitrarily change them,” Temple told The Center Square. “He thinks I can just say, ‘Oh that’s too high, you need to lower them. When it comes to excessive rates, yes we can deny excessive rates, if you understand that excessive means the insurer cannot justify them.”
