Bill to lower car insurance rates advances after lengthy, fiery debate

Bill aims to lower rates by saving insurance companies money

La. lawmakers take up contentious car insurance debate at the capitol

BATON ROUGE, La. (WAFB) - A state House committee approved a bill Tuesday, May 12, that aims to lower Louisiana drivers’ car insurance rates after a fiery, seven-hour debate on one of this session’s most ambitious goals. It now moves to the house floor for more debate.

Louisianans pay roughly $2,200 each year to cover their cars, second only to Michigan. Insurance Commissioner Jim Donelon predicted the measure would cut rates by as much as 25 percent, though not immediately.

The bill aims to discourage lawsuits, primarily by putting more car accident cases in front of juries. The Omnibus Premium Reduction Act would also extend the amount of time a victim has to sue after a wreck, potentially allowing for further negotiations that could lead to settlements.

The idea, Republican lawmakers who back the “tort reform” bill say, is to save insurance companies money by limiting lawsuits.

They hope the insurance companies will pass the savings on to their customers, but the insurance companies could not guarantee the bill would lower rates during a similar debate in 2019 and did not make any direct guarantees again this year.

Louisiana has a one-of-a-kind judicial system that’s prompted prominent business leaders to call the state a ‘hellhole.’ Republicans argue that adopting more common rules for lawsuits would lead to more common insurance rates.

“The average person in Louisiana pays twice as much as they should for car insurance,” Rep. Richard Nelson, R-Mandeville, said. “This omnibus bill looks at what every other state in the nation does differently... a corollary of average laws is average premiums."

If insurance companies do not lower their rates by at least 10 percent, the bill requires them to present evidence to Donelon that the rule change did not save them money or that they cannot afford to cut rates. It is unclear if that process or evidence would be public.

The wiggle room gave some democratic lawmakers heartburn.

"We’re making massive changes to the civil justice system based on something that’s just kind of a guess,” Rep. Mandie Landry, D-New Orleans, said.

A similar bill died in a committee friendly to Gov. John Bel Edwards in 2019, but the 2020 iteration of the state legislature is Louisiana’s most conservative ever. The measure stands a much better chance at survival this year.

Lawmakers have filed a number of other bills that aim to reduce rates by either adding incentives to reach court settlements after an accident or restricting how insurance companies calculate their rates.

Lawmakers largely killed a competing set of proposals from one of the omnibus bill’s biggest critics: Sen. Jay Luneau, D-Alexandria. Luneau filed several measures that would prevent insurance companies from calculating insurance rates based on credit score, gender over the age of 25, whether a person has been widowed, or whether a person has been deployed in the military for at least six months.

Only the military restrictions advanced to the Senate floor.

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