Senate committee derails ‘most important bill of the session’ that could lower auto insurance rates

May 15-- May 15--A state Senate panel Tuesday rejected what a business group called the most important bill of the session after senators complained that despite its hype the legislation wouldn't lower auto insurance rates as promised.

The 4-1 vote to defer the Omnibus Premium Reduction Act of 2019 by the Senate Judiciary A Committee effectively ends this session's effort by the business community and insurance companies to change how Louisiana courts handle lawsuits stemming from car wrecks in a way they say could lead to lowering Louisiana's high auto insurance premiums. Opponents counter that the four technical changes sought in House Bill 372 would keep injured people from having their day in court.

"We're not shocked," said state Rep. Kirk Talbot, the River Ridge Republican who sponsored the measure. The final vote came a week after a parliamentary maneuver that sent the measure to the Legislative Fiscal Office -- an additional hurdle that supporters claimed would sidetrack a bill the powerful Louisiana Association of Business & Industry called "most important bill of the legislative session" that ends June 6.

The House approved HB372 April 23 on a 69-30 vote -- one shy of a veto-proof majority.

Talbot sought changes to legal procedures that he said would provide incentives for parties in car wreck cases to settle their disputes rather than go to court. Louisiana has more bodily court cases than most states and reducing that number would lower litigation costs for insurance companies, which eventually could translate into lower premiums, he said.

The price of the average auto insurance policy in Louisiana, $2,298 per year, is $841 more than national average and second only to Michigan as the most expensive in the nation.

The Legislative Fiscal Office, however, found that the changes sought in HB372 likely would add 57 to 87 civil jury trials to already clogged court dockets statewide at a cost of about $16,590 each. The Louisiana Supreme Court reported that juries in state courts tried 173 civil cases to verdict in 2017. The courts would spend up to $1.4 million more, though an exact prediction couldn't be determined because just how many trials would be held is nebulous, the Fiscal Office stated.

Beyond what the fiscal note calculated, state Sen. Ryan Gatti, R-Bossier City, pointed out that insurance actuaries -- working for a task force looking into why Louisiana auto rates are so high, chaired by Talbot -- issued an analysis that could not definitively if costs would be lower. "There was much uncertainty on whether average jury awards would actually be less than average bench awards. The Actuarial Subcommittee found little credible experience readily available, in either Louisiana or other states, to quantify the potential savings due to a change in the jury trial threshold," the actuaries wrote.

State Sen. Jay Luneau, D-Alexandria, said the public perception of the legislation is that the changes would reduce auto insurance rates. "It's just not going to do that," Luneau said.

HB372 proposed extending from one year to two the deadline for filing a lawsuit; lowering the amount of damages sought to qualify for having the dispute decided by a jury instead of a judge, called jury trial threshold, from $50,000 to $5,000; limit recovery for injuries to what the party personally paid; and keep from the jury the existence of the defendant's auto insurance policy and the name of the insurer.

"This is a wish list for the insurance industry," Luneau said. "We're limiting ourselves about what we can do and who we can sue."

"This bill is a great bill," said Republican Sen. Jack Donahue, a Mandeville contractor who is the only non-lawyer on the Senate panel. "If we can just slow the growth, I think that would be a win."

Talbot said he never argued that his legislation would lower auto insurance rates, though some supporters did, but would lower costs by bringing Louisiana's civil litigation system more in line with other states.

Louisiana has the highest jury threshold in the country plus is one of only a handful states with one-year deadline to file a lawsuit, and few reveals to jurors the existence of an insurance company backing a defendant accused of causing the accident. "We're such outliers in these areas," Talbot said.

Though the effort is dead for this legislative session, Talbot predicted that high auto insurance rates will be an issue in the governor's race.

"Something has to be done. We can't continue going this way," Talbot said. "We are in crisis with the high cost of insurance."

Voting against changing the state's judicial system (4): Sens. Luneau, Gatti, Wesley Bishop, D-New Orleans, and John Malkovich, D-Shreveport.

Voting for HB372 (1): Sen. Donahue.

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