Louisiana auto insurance rates climb despite law meant to keep them low

Insurance Commissioner says rate fluctuations tied to highway fatalities

By: - November 15, 2021 7:01 pm
Aerial view of I-10 Mississippi River Bridge in Baton Rouge

Fear of Baton Rouge traffic is driving misinformation surrounding Louisiana’s plan to expand the I-10 corridor in the city. (Photo credit: Wes Muller/Louisiana Illuminator)

Auto insurance rates have increased in Louisiana this year despite a new law that insurance companies and lobbyists said would lower payments. Louisiana Insurance Commissioner Jim Donelon said rates have climbed by an average of 2% this year as of the end of October.

Donelon revealed the news at Monday’s meeting of Louisiana’s Task Force on Affordable Automobile Insurance. 

The increase comes 10 months after a new law that was supposed to lower auto-insurance rates took effect Jan. 1. The legislation received backing from mostly Republicans, as well as the insurance industry and the state’s largest business lobby group, the Louisiana Association of Business and Industry. It was opposed mostly by Democrats.

The new law is supposed to force jury trials more frequently so that lawyers have to argue damage claims to more people than a single judge; allow information about whether someone was wearing a seatbelt as evidence; limit the mentions of insurance coverage during a trial; and cap certain medical expenses for which damages can be awarded.

The changes are designed to lower the amount of money that car accident victims can get from insurance companies through court judgments. Those savings, as argued by insurance lobbyists and the politicians who backed the legislation, are supposed to trickle down to policyholders by way of reduced auto insurance rates. 

Another component to the tort reform theory, proponents have said, is that it will create a judicial climate friendlier to insurance companies, thus attracting more competition to the state. Anti-lawsuit groups, such as the American Tort Reform Association, have long placed Louisiana on lists of states they consider to be “judicial hellholes” for corporate defendants.

While pushing the legislation last year, proponents said drivers would see rates lowered by 10 to 25% within about a year of the act taking effect, but they have since walked back some of those comments. At Monday’s meeting, Donelon said the 25% estimate he gave lawmakers last year was a “pure guess” and not a promise.

Donelon said rates have increased this year due to a 7% increase in highway fatalities across Louisiana. 

He said auto insurance rates had been increasing for about five years through 2018 but actually started falling in 2019 and 2020. The 2020 rates were tied to the decrease in motorists driving during the coronavirus pandemic, but the 2019 rate and the rate spikes of the prior years are all tied to highway fatalities, Donelon said. 

Sen. Katrina Jackson (D-Monroe) said it was the first time she heard anyone attribute insurance rate fluctuations to highway deaths and questioned the idea that tort reform would lower rates. 

“I’m not hearing tort reform much mentioned,” Jackson said.

But the tort reform theory still has support among some lawmakers. 

Sen. Kirk Talbot (R-River Ridge) said the tort reform law hasn’t been in effect long enough to make a difference. He said there haven’t been many jury trials due to the coronavirus pandemic.

“As you know it might take 8 months, 9 months to even file the lawsuit, so it’s going to take that component to really show up later on,” Talbot said. “So, hopefully it will. But I think it’s too early to measure that.”

With Louisiana set to receive billions in federal infrastructure spending, Jackson wondered if infrastructure expansions that accommodate the increased traffic in areas such as Baton Rouge would do more to lower rates than tort reform.

“We know that our infrastructure is not holding the influx of citizens that are basically coming from New Orleans to Baton Rouge or from northeast Louisiana and northwest Louisiana to more urban areas to work everyday,” she said. “The amount of congestion on the roads and not expanding our highways and not being able to keep up with the shift in population may be attributing — I would like to know if that’s attributing to the mortality rates.”


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Wesley Muller
Wesley Muller

Wes Muller traces his journalism roots back to 1997 when, at age 13, he built and launched a hyper-local news website for his New Orleans neighborhood. In the years since then, he has freelanced for the Times-Picayune in New Orleans and worked on staff at the Sun Herald in Biloxi, WAFB-9News CBS in Baton Rouge, and the Enterprise-Journal in McComb, Mississippi. He also taught English as an adjunct instructor at Baton Rouge Community College. Among his recognitions are McClatchy's National President's Award, the Associated Press Freedom of Information Award, and the Daniel M. Phillips Freedom of Information Award from the Mississippi Press Association. Muller is an alumnus of Jesuit High School and the University of New Orleans and is a veteran U.S. Army paratrooper. He lives in Louisiana with his wife and two sons.