Max Dorfman, Analysis Author, Triple-I
Louisiana’s private auto insurance coverage affordability improved to 2.67 p.c of median family earnings in 2022 – down from 2.93 p.c in 2020 – but it surely retains the doubtful distinction of being the least reasonably priced state, Triple-I’s chief insurance coverage officer informed the Louisiana Home Insurance coverage Committee in current testimony.
Dale Porfilio – who is also president of the Insurance coverage Analysis Council (IRC) – mentioned that by practically each metric the state’s insurance coverage value drivers are properly above the nationwide common:
Accident frequency – Louisiana is 16 p.c greater than the nationwide common;
Restore value severity – Louisiana is 9 p.c greater;
Damage declare relative frequency – Two out of each 4 property harm claims (when automobiles hit automobiles) in Louisiana end in bodily damage claims (49 p.c), twice the one out of each 4 (25 p.c) throughout all states;
Medical utilization – Louisiana is 47 p.c greater;
Lawyer involvement – Louisiana is 24 p.c higher;
Underinsured motorists – At-fault drivers in Louisiana have inadequate legal responsibility insurance coverage limits in over 35 p.c of multi-car accidents, over twice the 16 p.c U.S. common; and
Claims litigation – Litigation over private auto claims in Louisiana is greater than twice the nationwide common, surpassed solely by Florida.
Porfilio famous that for auto insurance coverage affordability to enhance, general anticipated losses will should be decreased. Laws to scale back a number of of those key value drivers could be useful, Porfilio mentioned.
As Triple-I and IRC beforehand reported, the mixture of excessive insurance coverage expenditures and low median earnings make Louisiana a tough state through which to decrease prices. The frequency of hurricanes hitting the state will increase owners insurance coverage prices, and the excessive value of reinsurance has contributed to the Louisiana’s insurance coverage woes.
In truth, in 2020 and 2021, within the wake of Hurricane Laura and Hurricane Ida, insurers paid out greater than $23 billion in insured losses from over 800,000 claims filed.
Whereas Louisiana policymakers had been assured a $45 million fund authorized in February 2023 to encourage insurers to put in writing property insurance coverage enterprise within the state would assist stabilize the market, insurance coverage commissioner Jim Donelon acknowledged that the authorized grants are solely step one towards decreasing owners’ insurance coverage charges.
As Porfilio’s testimony demonstrated – and the market has dictated – extra work is required to decrease prices for shoppers and insurers in Louisiana.
