(The Center Square) − Louisiana lawmakers are preparing a new wave of insurance reform proposals, with a strong focus on auto insurance, as they seek to address the state’s rising rates and struggling commercial market.
“We’re going to continue to bring reform-minded legislation to the Legislature,” Insurance commissioner Tim Temple said, emphasizing that states like Georgia, Texas, and Mississippi are constantly adjusting their insurance regulations to attract business. “Louisiana has to continually monitor the changes that are made in other states so that we can keep up and that we can catch up.”
While property insurance remains a concern, Rep. Gabe Firment, R-Grant said that the Legislature ought to tackle auto insurance, particularly for commercial policies.
“We made tremendous headway last session when it comes to the property market, but I think, from my perspective, that the number one priority is going to be looking at what we can do to improve the automobile insurance market,” Firment said.
For commercial auto insurance, the severity of the problem is evident across various industries.
“We had six or eight logging companies and truckers, oil and gas contractors at our town hall meeting, and they told us they’re parking trucks and laying off workers because they can’t afford the insurance,” Firment said. “It’s certainly a crisis on the personal auto side, but it’s really catastrophic what the commercial auto market has become.”
Firment also mentioned exploring new ways to build long-term stability in the property insurance market, especially in south Louisiana. Firment and Temple emphasize the importance of incentivizing homeowners and businesses to fortify their properties with stronger roofs.
Firment mentioned a roof registry to track fortified roofs and the introduction of catastrophe savings accounts to help residents cover storm deductibles.
Louisiana lawmakers enacted several major property insurance reforms in the 2024 session, aiming to attract insurers and stabilize the market.
Though the efforts have yet to translate into lower rates, Temple said that “[t]he number of rate increases in the last year was less than the prior two years. And actually, the number of rate decreases that the department received last year has started to increase from prior years, so we’re trending in the right direction.”
New laws eliminate a harsh bad faith penalty while still allowing claims for proven damages, ease restrictions on policy cancellations, and streamline the rate approval process to encourage competition.
The Louisiana Fortify Homes Program, which provides grants for storm-resistant upgrades, was extended indefinitely. Lawmakers argue these measures will expand coverage options and lower costs, but concerns remain over consumer protections and potential premium hikes.
Property insurance remains on the agenda, with some legislators advocating for additional oversight.
“We all agree that auto insurance rates in Louisiana are much too high and that we have to do something to try to bring those rates back down,” Sen. Jay Luneau, D-Avoyelles said. “But we also need to continue our work on property insurance.”
Transparency in the insurance industry is also a pressing issue, with officials discussing ways to make premium data more accessible to the public.
“I am a big believer in transparency,” Temple said. “We’ve started requesting additional data from insurance companies so that we can put it in a format for consumers to see — things like what premiums are, what discounts are available, and how companies are setting their rates.”
“My philosophy is to create a competitive environment that attracts companies to Louisiana. Through that competition, premiums will moderate and then start to come down,” Temple said.
Others believe the state’s insurance commissioner should have more authority. “Louisiana is one of the few states where the commissioner can deem rates too low, but not too high,” Luneau pointed out. “That should change.”
Luneau also added that more transparency is needed from insurance companies about their costs and profit levels.
Lawmakers are unable to agree on the need for tort reform to adress auto insurance.
“In the last 50 years in the State of Louisiana, we have done tort reform nearly in nearly every legislative session, to some degree or another, more in some, less in others,” Luneau said. “And in that 50 years, tort reform has never lowered insurance rates for automobiles in Louisiana, not a single time.”
In response, Temple mentioned that plaintiffs’ attorneys openly promote multi-million dollar verdicts on their websites and social media, which Temple argues is clear evidence that large jury awards are a significant issue in Louisiana’s insurance market.
“We have an availability problem because of the legal environment in Louisiana,” Temple told the House Joint Insurance Committee in October.
In December, the American Tort Reform Association released its list of the worst civil justice environments in the country. Louisiana continued its appearance for the 15th time on the infamous “Judicial Hellholes”, where the state ranked 10th.