R Street Commends Louisiana Legislature on Passing Needed Insurance Reform

WASHINGTON, July 2 -- The R Street Institute issued the following news release:

The R Street Institute congratulated the Louisiana State Legislature on closing its special session with passage of a pair of reforms that reflect a positive direction for insurance markets in the Pelican State.

H.B. 57, passed June 30 by both the House and Senate, represents a compromise approach to tort reform intended to curb out-of-control legal costs in the state's auto insurance market. It follows Gov. John Bell Edwards' veto of the more expansive S.B. 418, passed during the Legislature's regular 2020 session. H.B. 57 retains several provisions of the earlier bill and, most notably, will lower Louisiana's threshold for jury trials, currently the highest in the nation, from $50,000 to $10,000.

Under the current $50,000 threshold, 53 percent of auto claim disputes in the state are heard before elected judges, providing opportunity to shop for favorable venues for frivolous cases, according to R.J. Lehmann, R Street's director of finance, insurance and trade policy.

"Louisiana's costly and uncompetitive auto insurance markets are a big reason it has, for two years in a row, ranked dead last among the 50 states in R Street's annual Insurance Regulation Report Card," Lehmann said. "Over the past five years, only Colorado and Michigan have had higher loss ratios for personal auto insurance than Louisiana. Moreover, only Alaska and New York have more concentrated auto insurance markets."

Over the longer term, Louisiana's report card grade also could be improved by H.R. 36, a resolution passed by the House June 29 that calls for the House Committee on Insurance to study whether the state commissioner of insurance should be an appointed position, rather than an elected one.

"We have long held that insurance regulation is a technical matter that should be overseen by professionals, not politicians," Lehmann said. "The history in Louisiana of three successive insurance commissioners who ended their terms in prison is ample evidence of the dangers of politicization."