New Orleans, LA – The legislature is set to address the rising auto insurance premiums in its upcoming regular session.
Rep. Gabe Firment (R-Pollack), who leads the House Insurance Committee, states that natural disasters and road conditions are not contributors to our high auto insurance premiums.
“That’s a talking point we hear quite often is that it’s our roads here in Louisiana that are causing our insurance rates to be so high,” says Rep. Firment. “That’s not the case.”
The company states that a major reason for our elevated premiums is the expense associated with legal proceedings.
“We file twice as many bodily injury claims as the national average,” Firment points out. “We file many more bodily injury claims (than) in the states in our immediate geographic area. We litigate at a much higher rate than other states.”
Ben Riggs, executive director of Real Reform Louisiana, argues that restricting a driver’s ability to sue will primarily serve the interests of insurance companies and ultimately harm the victims involved.
Riggs points out that a significant issue is auto insurance companies determining their premiums based on credit scores, which he argues are unrelated to a person’s driving abilities.
“In a state like Louisiana, where collectively we have the second worst credit score in the country, using something like credit scores which can double your insurance rate have had a terrible effect on insurance premiums in Louisiana,” Riggs says.
Riggs hopes for greater clarity from insurance companies regarding the factors that influence a driver’s premium.
“This is something that’s hidden behind a veil of secrecy by the insurance industry,” says Riggs, “and so we need to better understand it.”
The company states that although the percentage of uninsured drivers aligns with the national average, a significant number of drivers lack sufficient liability insurance to cover the repair costs for vehicles damaged by an at-fault driver.
“We have very low minimum limits here in Louisiana,” says Firment. “We know that’s a problem. The cost of vehicles have gone up, and our liability limits are not sufficient.”
The company states that increasing the minimum liability requirement is much easier to suggest than to implement, as this alone would cause the already high premiums to rise even further.
Riggs shares Firment’s view that underinsurance poses a problem, as modern vehicles are increasingly sophisticated and, consequently, significantly costlier to repair.
“When I was 20 years old, replacing a side view mirror on a little Pontiac could cost $50 to $75,” says Riggs. “But now that mirror has sensors and cameras and blinkers in it, and so it’s a $500 mirror and therefore just more to replace.”
