BATON ROUGE, La. (WAFB) - Lawmakers sent a bill that aims to lower Louisiana drivers’ car insurance rates to Governor John Bel Edwards’ desk in the final minutes of the 2020 regular legislative session Monday, June 1.
Louisianans pay roughly $2,200 each year to cover their cars, second only to Michigan. Insurance Commissioner Jim Donelon predicted an earlier version of the measure would cut rates by as much as 25%, though not immediately.
“Even before the COVID shutdown, this was a big priority for the people of Louisiana,” the bill’s author, Sen. Kirk Talbot, R-River Ridge, said. “[Louisianians] are tired of paying these high premiums. All the states around us are cheaper. Forty-eight other states are cheaper.”
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 did not publicly guarantee the bill would lower rates.
The final version of the bill represents somewhat of a compromise that neither Republicans nor the Edwards administration are satisfied with. The plan would now make filing a lawsuit after a wreck slightly less difficult than lawmakers’ initial proposal would have.
Each side was trying to avoid a worst-case scenario where Edwards vetoed the plan and then lawmakers overrode his veto during the special session. That fight could cost some lawmakers political favor with Edwards or their Republican leadership.
It’s unclear if Edwards will veto the slightly watered down bill, though the measure did not pass with enough votes to override a veto anyway.
Louisiana has a one-of-a-kind judicial system that has prompted prominent business leaders to call the state a “hellhole.” Republicans argue adopting more common rules for lawsuits would lead to more common insurance rates.
“I think people are being oppressed with these high insurance premiums,” Talbot said. “The whole point of the bill is not to let insurance companies profit from the reform.”
If insurance companies do not lower their rates by at least 10%, 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’s unclear if that process or evidence would be public.
The wiggle room gives some Democratic lawmakers heartburn.
"There’s just no evidence that these particular reforms will lower car insurance rates,” Rep. Mandie Landry, D-New Orleans, said. “There’s a lot of things we could do to help with our insurance rates: first would be to stop discriminating against people with poor credit, then help with transportation and roads, but this bill isn’t going to do what they say it will do.”
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