This election season in Louisiana, many candidates and advocacy groups routinely attacked the legal profession, trying to convince Louisianans that the high cost of auto insurance in the State is the fault of lawyers. However, the facts easily dispel this attempt to single out the group of people actively working to help insureds claims be paid, many times after an insurance company wrongfully denies their claim: lawyers.
Certain insurers want the cost of going to court to force a claim to be paid to be more expensive than the claim itself. That is why these advocacy groups, largely funded by millions of dollars in donations from insurers, want new laws to force even small claims to be tried by a jury. They know that the high cost of jury trials will potentially deter persons from bringing claims. Why? They say that by cost blocking the courthouse doors that auto rates may come down. But here’s the truth:
FACT #1: Without cost-effective access to courts, insurance companies will not pay any or will pay as little as possible on legitimate claims.
FACT #2: These insurers and advocacy groups refuse to include in their proposed laws a requirement that the insurance companies lower their rates based upon transparent and non-discriminatory rating factors.
FACT #3: All groups fail to point to the failures of Insurance Commissioner Donelon to require insurers to fully disclose the basis behind their high rates. In fact, Donelon has been allowed to let the insurance companies charge women, particularly widows, people with lower credit scores, and people with lower income higher premiums even with clean driving records. It should come as no surprise to anyone that the campaign finance report of Commissioner Donelon is littered with thousands of dollars in donations mostly from, you guessed it, insurance companies.
The solution for Louisiana? Market and regulatory practices which increase competition amongst auto insurers and require total transparency for the setting of all premiums. This works in other states where premiums remain reasonable and low. Below is an article written by former Texas Insurance Commissioner J. Robert Hunter in 2015 entitled “Reducing Auto Insurance rates: what will work in Louisiana” at the below link offering both market and regulatory solutions that other states successfully use and Donelon and insurers reject:
The real solution to reducing rates in Louisiana is not to angrily or with talking points attack lawyers. The real solution is to reform the regulatory environment of the state’s auto insurers to increase competition and give ALL Louisianans transparency in their rating factors, the charges the insurer is assessing to them, and use policies in other states, as denoted above, which will bring meaningful reform through lower rates.