Why is our auto insurance so costly?

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Despite many hours of testimony from experts, state lawmakers are still without a solid explanation as to why auto insurance rates are so much higher in Louisiana than in other states — and one organization that might help find answers was noticeably absent last week.

Four separate legislative committees convened Friday to receive data and testimony related to factors behind the state's skyrocketing auto insurance rates. The hearings were the latest round in a series of monthly meetings the Louisiana Legislature is holding to study the insurance crisis affecting drivers and homeowners across the state.

Louisiana has the third highest auto insurance costs in the nation with an average annual rate of $3,618, according to the most recent Bankrate.com annual report. Only Florida ($3,945) and New York ($3,840) had higher premiums. The national average annual auto insurance cost is $2,543.

"We truly are just trying to find a solution," state House Speaker Pro Tempore Mike Johnson, R-Pineville, said in a phone interview Monday. "If people don't participate, then the product that could come out of this could be something people don't like. It could be extreme."

Johnson said his warning isn't hyperbole to try to drum up fear but is borne out of true concern that legislators could end up making the crisis worse or push for extreme changes for attorneys because the Louisiana State Bar Association (LSBA) is refusing to share data or even meet with lawmakers.

Lawmakers are interested in learning whether advertising by personal injury law firms is causing more people to file lawsuits following auto accidents. While such marketing is ubiquitous — on television, radio and highway billboards — lawmakers haven't found much data on the number of those ads or their ultimate costs to policyholders as compared to other states.

The state bar association has to approve every lawyer commercial and billboard before they go out to the public. Johnson said lawmakers invited the LSBA to Friday's meetings, but their invitation was declined.

The LSBA could not be reached for comment via phone or email Monday. In a letter sent to the Legislature, the Bar Association cited the fact that the LSBA "neither adopts nor enforces the rules of professional conduct" as their reason for not participating.

Johnson said the Bar Association's refusal to participate in the discussion shows a blatant disregard for the plight of Louisiana residents struggling under a significant financial crisis related to insurance.

Also declining lawmakers' invitation was the Louisiana Supreme Court, though the justices did offer to meet with them privately, according to House Insurance Committee Chairman Gabe Firment.

Although various other professionals and academics have provided data on auto accidents, insurance claims, lawsuits, inflation, traffic deaths and advertising costs, no one has been able to give a definitive, well-founded explanation as to how any of those data points is causing insurance rates to spike in Louisiana but not in other states.

Robert Hartwig, a University of South Carolina finance professor who previously spent most of his career in the insurance industry, presented lawmakers with a wealth of data specific to Louisiana but had little to no numbers from other states with which it could be compared — a main request of lawmakers who want to identify factors causing the crisis.

Testimony also revealed that Louisiana, for the most part, is not an outlier when it comes to some of the most obvious factors often blamed for high insurance rates. For instance, during the House Civil Law Committee hearing, Rep. Josh Carlson, R-Lafayette, pointed out that Mississippi has the highest traffic fatality rate in the country with 23.9 deaths per 100,000 residents. That's considerably higher than Louisiana's rate of 19.7 — yet, as Carlson correctly noted, auto insurance in Mississippi is nearly half the cost. Mississippi also has a lower rate of observed seat belt use, according to the Insurance Institute for Highway Safety.

As a result, discussions at legislative hearings almost always end up reverting to the years-old, unyielding debate over whether insurance companies or trial attorneys are to blame for Louisiana's insurance crisis.

The few statistics Hartwig had available that could be compared between states mostly revolved around personal injury legal services or so-called "tort costs." However, lawmakers criticized the professor for using stats from the American Tort Reform Association, a lobby group formed and funded by the nation's largest insurance companies and other large companies for the primary goal of getting laws passed that make it harder for people to sue corporations.

Louisiana's insurance crisis has, to some extent, blurred the usual partisan lines that often divide the Legislature, as there are many lawmakers, both Republicans and Democrats, who are personal-injury lawyers. And just about all the other lawmakers have constituents who are struggling under the weight of high insurance costs.

Johnson said the high cost of insurance is probably the most common complaint his office receives from constituents. He said the Legislature is open to exploring just about any ideas for how to solve the crisis.

"We truly are just trying to find a solution," he said. "We're looking for any way to change this because it has become devastating. It really has."

One thing most lawmakers seem to agree on is that a driver's ZIP code is the primary variable affecting auto insurance rates. However, they have yet to hear testimony from an insurance company official who can explain and break down how that ZIP code variable is quantified when calculating a driver's insurance premium quote in Louisiana and then compare it to the same driver's quote in another state.

"I'm not sure we're getting the people at the table that can or will answer that question," Johnson said.

The Louisiana Illuminator is an independent, nonprofit, nonpartisan news organization and part of States Newsroom, the nation's largest state-focused nonprofit news organization.