Car Insurance Rates Might Be The Big Contentious Issue In This Spring’s Legislative Session

If you’ve been paying attention to Lee Zurik’s latest bit of investigative reporting at Fox 8 News in New Orleans, you’ve seen a good bit of discussion about what causes Louisiana to have among the highest rates, if not actually the highest rates, in the country.

Yesterday Zurik had another report along those lines, revealing that State Representative Kirk Talbot (R-River Ridge) is going to attempt to fight the problem with a package of bills in this year’s legislative session aimed at forcing those rates down.

“We’re the least affordable in the country when you look at income index versus affordability, we are number one,” State Representative Kirk Talbot, R-River Ridge, said. “That to me is the most alarming statistic out there.”

Rep. Talbot chairs the State House Insurance Committee and a recently created task force looking at the high costs of auto insurance in the state.

“We have a large segment of our population that is simply shut out of the auto insurance market,” Rep. Talbot said.

Talbot expects a series of bills to be introduced at the Spring 2019 legislative session in Baton Rouge. He hopes the bills will help reduce the cost to Louisianians.

“What makes us different from other states — say Alabama, two states away and 32nd cheapest? Or even Mississippi our neighbors to the east?” Rep. Talbot questioned.

One thing that separates Louisiana from the rest of the country is the amount of a jury threshold, or the amount a case must be worth to be put before a jury. If a case falls below the jury threshold, a judge will hear the case.

Talbot said a bill will be introduced to lower that threshold. In the past, similar efforts have failed. Judges have fought against it, claiming it will clog up and slow down the courts.

“It is a workload,” District Judge Robert Morrison said.

According to statistics from the Louisiana Supreme Court, the state had only 173 civil jury trials. Fifty percent of the state’s parishes had no civil jury trials. In 2017, Jefferson Parish had 17 civil jury trials and Orleans Parish led the state with 33 civil jury trials.

Attorneys in Louisiana file more lawsuits than anywhere else we found. In Austin, lawyers file 169 suits per 100,000 people. That number jumps to 234 per 100,000 in Houston and 273 in Dallas. In New Orleans, it’s three times more — 853 suits per 100,000 people.

Talbot’s package of bills will likely contain some other tort reform measures beyond the jury trial threshold. Plaintiff lawyers say that the state’s one-year prescription on lawsuits arising from car wrecks forces people to rush out and hire an attorney and thus file a lawsuit against an insurance company before they even know what their damages are, and most states have a two-year prescription, so that change might be part of the package (whether it would do any good or not is debatable, but as a matter of compromise it might be worth the tradeoff to get the jury trial threshold covered). It wouldn’t be much of a surprise if the state’s ridiculous gag order law preventing the introduction of evidence that a car wreck victim wasn’t wearing a seatbelt wasn’t up for repeal as part of the package, either.

But to go with those and other tort reform measures aiming at improving Louisiana’s legal climate and thus making the state a less hazardous place for auto insurers to operate – and hopefully therefore introducing more competition which drives down rates, Talbot is also suggesting a mandatory rate reduction as part of the package.

And while that’s hardly a free-market way to go about the problem, politically it could make car insurance a red-hot campaign issue this fall.

The insurance companies will hate that mandatory rate reduction, though what’s likely is the reduction would be less than what the market would be expected to produce based on the other elements of the package. If seat belt gag orders, moving away from direct action (filing lawsuits directly against someone’s insurance company without naming the other party in the car wreck in the suit, which only two states in America allow) and the jury trial threshold, for example, would lower insurance rates by 15 percent, then a rate reduction of 5 percent by law doesn’t impede the market and they don’t really have a good argument against that dictate. It’s a mechanism that gets around the fact too many in the state legislature have a poor grasp of economics.

But more than that, attaching that mandatory rate reduction means the politics of Talbot’s package become extremely difficult in opposition. Because if you vote in the legislature to kill his bills you’re voting against lowering car insurance rates.

And as Talbot notes in Zurik’s latest piece, the people who are hardest hit by our sky-high insurance rates are the poor, a disproportionate number of whom are black. Talbot points out that if you look not just at colossal car insurance rates but median income, where Louisiana ranks poorly, the affordability of car insurance is an even bigger problem than just the high rates.

So how are you going to vote against that package of bills? The fact so many members of the Legislature are trial lawyers who won’t want to vote for tort reform measures is what’s kept those from passing in the past, but now they’ll be open to charges of oppressing the state’s people not just by screwing up the legal climate but voting against efforts to drive down the rates.

And the state’s governor, who is a trial lawyer funded by trial lawyer and who has been diametrically opposed to any efforts at tort reform since he’s been involved in state politics, will really be in the crosshairs as this debate gets going.

It all adds up to a spirited debate to come with lots of implications for this fall’s elections. Talbot is term-limited in the House and is running for the open Senate seat being vacated by the similarly term-limited Danny Martiny, and he’s a likely bet to win. But his package of car insurance bills might well spoil the election hopes of several other politicians around the state this fall.

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