Editorial: Reducing car insurance rates may require changing more than just our laws

Consumers across America are struggling to pay for car insurance right now, according to the experts. In Louisiana, we don't need experts to tell us that we've got it worse than just about anywhere else.

According to a recent study by U.S. News & World Report, the average annual rate for auto insurance in Louisiana is $2,370 — significantly higher than the national average of $1,442 and the second-highest in the nation, just behind Florida at $2,393.

On top of stiff increases in the cost of homeowners' insurance and federal flood insurance, the recent increases in car insurance rates make things especially tough right now. Auto insurers doing business in this state have increased their premiums by an average of 12%, with the biggest companies raising rates by as much as 34%.

We worry that affordability will soon grow from an issue to a crisis — if it's not at that stage already. We also wonder what, if anything, government can do about it.

Lawmakers often debate the impact of Louisiana's high incidence of lawsuits arising from wrecks, and they occasionally pass various forms of "tort reform" — with promises that changes to our legal system will bring premiums down. Instead, rates keep going up.

The latest increases are in part a rebound from the pandemic years, when some major companies actually reduced premiums temporarily because people were driving so much less.

Those days are gone.

''We've been seeing significant rate increases driven by inflation for parts and labor all across America, so it is not any different here than elsewhere,'' long-serving Insurance Commissioner Jim Donelon said.

Small comfort, but Donelon is correct. The cost of repairing even modest vehicular damages has gone up dramatically. Electronics and safety features have saved lives, but replacing a fender or a rear-view mirror seems to cost as much as a Caribbean cruise, leaving folks to wonder what's going on.

Shop around for lower rates? That's actually good advice from Donelon, as the recent round of rate hikes are averages. Individual consumers might be able to get some relief if they compare prices.

Louisiana requires minimum coverage, so the costs of driving — particularly for working families — impact the economy generally.

Could additional changes to state law bring relief?

Business groups and insurers constantly press for more restrictions on lawsuits arising from wrecks, and they convinced lawmakers in 2019 to pass significant changes to some of the arcane legal intricacies of tort law.

We supported that measure — a compromise involving the trial lawyer bar, business groups and Gov. John Bel Edwards, himself a lawyer. Rates still went up. Business lobbyists say it's because the compromise did not go far enough. Consumer advocates say it's because greedy insurers offer false promises.

Donelon says Louisiana still leads the nation in the number of accident-related lawsuits and that courts drive up insurance costs with big awards against insurers.

Lawsuits do drive up insurance rates, but so do other factors. For example, Louisiana has a significantly higher rate of vehicular accidents (read: bad drivers) and too many people driving without any insurance, or with too little coverage. Other factors include poverty, crime, traffic congestion, bad weather and bad roads — all of which Louisiana has in abundance.

What can we do?

Maybe adopt the same rules that apply in Maine, Ohio or North Carolina, where, according to U.S. News, car insurance rates are among the lowest in America. That's been a bridge too far for politicians — and ratepayers — in Louisiana.

And the unsettling truth is that, to bring rates down, we may need to change more than just our laws.