I am not sure that people in Louisiana understand that the passage of HB 9 by Rep. Ray Garofalo and/or SB 418 by Sen. Kirk Talbot, the main tort reform bills, has huge significance beyond lowering automotive rates. HB 9 sailed out of the House Insurance Committee Tuesday on an 11-5 vote, while SB 418 had a more difficult time in the Senate Judiciary A Committee but did manage to come out on a 4-3 vote.
Louisiana is known as a Judicial Hellhole. The reasons for this are more than just outrageous automobile rates that our people suffer. That ringing indictment of our state comes from the fact that we are widely perceived to have a civil justice system that is not fair or balanced. As relates to automobile rates, our system of justice results in the second highest insurance rates in the nation. As it relates to our economy, our civil justice system is well known to be a major reason that business people accept that we are negative toward business.
When noting that we are a Judicial Hellhole I carefully used the word “perceived.” The trial lawyers in our state are quick to say that that title is not so. But what they say really does not matter, what matters is what business people believe. It does not matter because, whether true or not, the perception that we are a state unfair to business is widely accepted and, in all cases, perception is reality! And that reality is reflected by an exit of insurers, higher rates, and low prospects for prosperity for our people.
When deciding on where to move to or to expand in, business people have a list of metrics that they use to evaluate their decisions. As noted, one of the main metrics is fairness of civil justice. When our rank in this impactful metric is one of the worst in the country, we are handicapped in ability to attract businesses. And when we do not attract businesses, our people’s income and their opportunity for promotions suffer. So not only do our people pay astronomical insurance rates, they are deprived of the prosperity that a strong business climate provides.
Tort reform will save our people directly by lowering insurance costs. Tort reform will create a better business climate which in turn will result in more income for our people and more opportunity to have better job opportunities.