Louisiana Insurance Commissioner Tim Temple
Measures favored by tort-reform advocates passed the state Senate this week in the wake of Louisiana’s insurance commissioner warning that new data highlights how the state faces a higher rate of bodily injury claims and insurer losses than neighboring states.
Commissioner Tim Temple said last week that it was imperative that the state Legislature pass meaningful legal reforms to stem the losses driven by bodily injury claims. Data from the National Association of Insurance Commissioners (NAIC) indicates that while Louisiana has only 1.4% of the nation’s population, the state is responsible for 3.65% of U.S. bodily injury claims – more than double the national national average per capita, according to the Louisiana Department of Insurance.
“The numbers overwhelmingly show that Louisiana’s bodily injury claims environment is unsustainable compared to national and regional markets,” Temple said in a prepared statement. “Our state is generating massive financial losses from bodily injury claims despite our relatively small population. The findings are crystal clear – we must reduce bodily injury claims and excessive litigation to lower the cost of auto insurance in Louisiana.”
State senators seemed to heed the warning as they passed some key reforms this week. Among the bills approved on the Senate floor were House Bill 434, authored by Rep. Emily Chenevert (R-East Baton Rouge), which would limit damages recovery for plaintiffs determined to be 51% or more at fault for an injury, and SB 231 by Rep. Mike Reese (R-Beauregard), which places limitations on how much a plaintiff can recover for past medical bills.
Also passing the Senate this week was HB 434 by Jason DeWitt (R-Alexandria), which makes uninsured drivers responsible for the first $100,000 of bodily injury damages.
Business groups have favored such reforms to help reduce insurance costs.
“Small business owners are fed up with frivolous lawsuits and sky-high insurance premiums,” the Louisiana state director of the National Federation of Independent Business, Leah Long, said. “Too often, the legal system rewards trial lawyers instead of focusing on fairness. These reforms would help level the playing field.”
A different perspective, however, was offered this month by Florida-based Weiss Ratings, which reported that new data shows insurers operating in Louisiana are more often closing out claims with no payments while lobbying for rate increases even as their investment profits outpace underwriting losses.
“Louisiana homeowners are being shortchanged by insurers prioritizing profits,” Dr. Martin Weiss, founder of Weiss Ratings, said in a prepared statement. “Regulators must act, and homeowners should choose insurers with fair practices and strong ratings.”
The rating agency found that nationwide last year, insurers closed 41.9% of their homeowner claims without approving any payments. But in Louisiana, the rate of denial was even greater, at 44.6%, according to Weiss Ratings.
And since 2004, insurers operating in Louisiana reported $1.6 billion in underwriting losses, but the red ink was more than erased through $88.3 billion from investments and other income sources, the rating agency said.
“That’s $55 in profits for each $1 of underwriting losses,” the agency reported.
The policyholders also pay fees to affiliated companies, according to Weiss Ratings, and this shrinks reserves that are used to pay claims.
