Mark Ballard: Tort changes in Louisiana will be a popular topic — but won't help lower auto insurance rates

Jan. 5--Moments after his sweeping "tort reform" legislation was spiked by a state Senate committee back in May, Rep. Kirk Talbot smiled and predicted that his bill would become a centerpiece of the fall campaigns and of the upcoming legislative session.

He was right.

Republican Eddie Rispone said "trial lawyer" almost as much as he said "Trump" in the recent gubernatorial campaign. Legislative candidates across the state ran on claims that Louisiana's out-of-control lawyers caused auto insurance rates to skyrocket.

Conservative bloggers, columnists, spokesmen, and radio talk show hosts -- almost as if they are reading from the same memo -- have used the same language since the election to repeatedly urge Democratic Gov. John Bel Edwards to end what they all call a "gravy train" for "trial lawyers" and to back "common sense solutions" after the new Legislature takes its oath next week on Jan. 13.

"Trial lawyers" is the epithet used by conservatives to describe attorneys who represent individuals against companies. "Tort reform" describes changes in the technical legal language that would limit access to the courts for individuals suing companies and their insurers.

State Rep. Sherman Mack, the Albany Republican who is a leading speaker of the House candidate, predicted "tort reform" will be the main issue before the Louisiana Legislature this year. He is planning to pursue Talbot's omnibus bill as three separate instruments, thinking that'll make tort reform easier to pass.

The primary components of Talbot's failed Omnibus Premium Reduction Act are: Decreasing the jury threshold from $50,000 to $5,000, which would send more trials to juries, rather than judges; extending the time to file a lawsuit from one year to two, which would give the parties more time to settle a dispute; eliminating the "collateral source" rule, which would limit what plaintiffs could collect from insurance companies for injuries; and requiring the defendant driver be sued by name instead of his insurer, who ultimately will pay.

The problem is that "tort reform" won't lower auto insurance rates, according to the insurance industry.

It is true that Louisiana has the second-highest average premium price at $2,298 per year, or 58% more than the average national price, according to carinsurance.com and other comparison websites.

But diving deeper into the numbers, about 40% of Louisiana drivers carry the absolute minimum bodily injury policies of $15,000 per person and $30,000 per accident. Lower policy limits usually translates into more legal action because the insurance doesn't cover enough of the cost to treat injuries. Premium prices for Louisiana drivers buying the bare minimum of coverage are an average $705 annually -- among the lowest in the country.

Insurance companies also charge more to insure people with bad credit ratings, regardless of how well they drive. Louisiana drivers with good credit have rates far better than most, including drivers in Florida and Texas.

As an influence on premium prices, the Property Casualty Insurers of America put litigation at the bottom of a list of factors, which include urban congestion, distracted driving and poorly maintained roads.

A chief lobbyist for the auto insurance industry conceded the point in legislative committee testimony.

"It's a misnomer to ever really believe that your rates are going to go down," testified insurance lobbyist Kevin Cunningham. "There are so many pressures for it to go up: medical costs continue to go up, the cost of the vehicle continues to go up, the amount of wages that you have to compensate for continues to go up."

While doing research on his omnibus tort reform bill, Talbot's task force ordered an analysis by a panel of four insurance actuaries, the people who calculate for insurance companies how various situations will impact the number and cost of claims. The report reviewed each of the points in the omnibus bill and found no cost savings, at all.

Another report, this one by the Legislative Fiscal Office, determined that the number of jury trials would increase under the system proponents want.

And then around Christmas, a free market think tank, the R Street Institute, based in Washington, D.C., gave Louisiana's insurance situation the nation's only F grade for the second year in a row. Litigation was not mentioned.

Instead, the R Street report found fault with Louisiana having an elected insurance commissioner who can decide if insurance companies can raise rates. "Louisiana employs a stringent system of rate regulation, which no doubt contributes to the lack of competition in its auto insurance market," the report said.

"If we run around the state and say we're going to pass this and you're going to see your insurance rates reduce," said state Sen. Rick Ward III, a Port Allen Republican who wants to address higher insurance rates, "what happens in two years, whenever we passed it, and the rates don't reduce? We've lost a little more credibility with our constituents."

___

(c)2020 The Advocate, Baton Rouge, La.

Visit The Advocate, Baton Rouge, La. at www.theadvocate.com

Distributed by Tribune Content Agency, LLC.