Auto insurance bills move ahead

After several hours of debate on both sides of the capitol, Louisiana lawmakers advanced two bills that would change how Louisiana’s legal system handles automobile accident claims.
Supporters say House Bill 9 and Senate Bill 418, which seek to make the same changes, could lead to lower auto insurance rates in the state. Critics say there’s no evidence to support that claim.
For many business lobbyists and Republicans, the bills represent the top priority for the session, or at least the top priority not related to the COVID-19 pandemic.
“All of us get tired of paying these high insurance rates,” said state Sen. Cleo Fields, a Baton Rouge Democrat who said he was skeptical about the changes. “But I want to make sure that’s what [the legislation] does.”
The changes fall under the category of tort reform, which generally seeks to limit plaintiffs’ ability to sue or the amounts they can collect. Tort reform advocates say Louisiana’s legal system, at least in some jurisdictions, favors plaintiffs. Insurance companies settle rather than fight frivolous lawsuits, which raises the companies’ costs, leading them to pass the higher costs on to consumers.
The legislation does not require commercial carriers to lower their rates. Sponsors said there are as few as two insurers writing policies for businesses and they didn’t want to scare off those insurers with a mandate. Several business owners testified the rapidly rising rates for commercial insurance threaten to put them out of business.
The bills would require price reductions for other drivers, but with a catch. If the measures are implemented, auto insurers writing policies in Louisiana would be required to lower their rates at least 10 percent unless they can show the insurance commissioner that they can’t afford to make the change.
Commissioner of Insurance Jim Donelon, a Republican who supports the changes, said he would only let a company opt out if lowering their rates 10 percent would make the company insolvent. Donelon said he thought the changes could lead to an average 25 percent rate reduction, which would put Louisiana in the middle of the pack nationally, though he admitted there was no way to say for sure.
“It’s a shot in the dark,” Donelon said. “It’s not an exact, quantifiable number.”
Jeff Albright, CEO of the Independent Insurance Agents and Brokers of Louisiana, said the accident rate in the state is only slightly above the national average, but the claims for bodily injury are sky high, suggesting either Louisiana residents are somehow more fragile than most people or that many claims are not legitimate. The legal changes are meant to “squeeze the excess costs out of the system,” Albright said.
Some Democrats said tort reform shouldn’t be on the agenda for the pandemic-shortened session, arguing only “must pass” bills and those addressing COVID-19 issues should be debated. They said some people who wanted to offer testimony in person were not comfortable doing so because of the public health situation.
“This bill is not receiving, in my estimation, a fair public hearing,” Rep. Sam Jenkins, D-Shreveport, said of the House bill.
Real Reform Louisiana, an anti-tort reform group, made a similar argument, noting that very few people consider tort reform to be among the state’s most important issues.
“While the people of Louisiana are focused on responding to the COVID crisis, special interests are trying to sneak through legislation that would rig the courts in favor of insurance companies and big corporations,” said Eric Holl, the group’s executive director.
Some Democrats questioned whether the House bill meets the constitutional requirement to have a single purpose, given the range of changes it proposes. Rep. Alan Seabaugh, R-Shreveport, said the single object is to lower auto insurance rates.
The legislation would lower the threshold that guarantees the ability to ask for a jury trial from a lawsuit worth at least $50,000 to $5,000. Most states have no such threshold, and no other state is higher than $15,000. Proponents say there are some judges who favor plaintiffs, so defendants would have the option to take their chances with a jury.
But opponents say insurance companies can better afford to pay for a civil jury trial, which the party requesting the trial must do in Louisiana. They also worry aloud about whether the change would clog the courts with additional trials, increasing costs and forcing more people to take off work for jury duty, and point to an actuarial task force that estimated eliminating the threshold would lead to an estimated 0.5 percent savings.
The legislation also would take away the right to sue an insurance company directly, rather than the driver that caused the accident. The hope is that courts would be less likely to approve a frivolous claim against an average person rather than a “big, bad insurance company.” Rep. Robby Carter, D-Amite, complained about what could happen if the person who caused the wreck can’t be found.
The bills seek to extend the amount of time to file a lawsuit from one year to two, in hopes of giving the parties more time to work out a settlement rather than going to trial. And it would allow courts to consider how much was actually paid for the plaintiff’s medical bills; since insurers often negotiate to pay below the “sticker price” of a procedure, so the difference between the price paid and the nominal price represents a “windfall” for the plaintiff, supporters of the change say.
The legislation also would allow courts to consider evidence that an injured person was not wearing a seat belt, which could lead to a 25 percent reduction to the possible award for damages.
Rep. Ray Garofalo, R-Chalmette, said most of the people who testified for his bill are business people, while most of the opposition are lawyers and judges.
“It paints a picture that lets me know that we need to address this issue for the business people and consumer who are being tremendously affected by it,” he said.