Newell: Consumers are getting screwed by high insurance rates

Newell Normand
May 21, 2019 - 8:55 am

Once again, Louisiana has the second-highest auto insurance rates in the country.  To try and understand what’s driving this, I spoke with Louisiana Insurance Commissioner Jim Donelon.

“Part of that is the fact that we are a poorer state than almost every other state,” Donelon said.  “The percentage of drivers in Louisiana driving with minimum limits of insurance, just that which the law requires them to have, is 45%.  Another 15% drive uninsured.  So 60% of the people we share the highways with do not consider themselves to have a real need for insurance to protect their assets.”

The states with the lowest rates are generally more rural states.  Louisiana is a rural state.  What makes us different?

The exception here is really the New Orleans and Baton Rouge markets.  The rates are sometimes as much as eight times the national average.  I keep trying to figure out what’s behind this.  Why is it so much more expensive here compared to other areas?

One thing I recognized was that a lot of the states with lower rates have appointed judges while we have elected judges.  It didn’t have this political influence, this aura, hanging over the entire system.

Additionally, one area Donelon identified was the jury threshold.

“This threshold denies people the right to a jury trial unless they’re being sued for less than $50,000; and that is, in my opinion, a major driver of the cost of auto insurance,” Donelon explained.  “And the fact that we’re so litigious in our state over minor accidents, which is where the real abuse is.  It’s not in the truly injured individuals.  Those folks get a jury trial, and they get from the trial what they’re entitled to.  It’s the fender benders that proliferate and result in the higher cost of insurance in our state, in my opinion.”

It’s a complicated issue.

Comments ()