Temple relies on data to explain high auto insurance rates in La., but plaintiffs’ lawyers don’t believe it

Louisiana (Louisiana Illuminator) – As state leaders seek answers to why auto insurance rates here are so higher than other states, industry studies show Louisiana has the highest frequency of injury claims and the second-highest lawsuit rate in the country.

Both data points are among the few statistics in which Louisiana appears to be an outlier, and Insurance Commissioner Tim Temple said they are likely among the primary reasons why auto insurance premiums in the state are soaring.

But attorneys and plaintiffs’ advocates say the figures, some of which they say come from the insurance industry, may be flawed and may not address the root cause of increasingly unaffordable coverage in a state already struggling with poverty.

While Louisiana is slightly above the national average for the frequency of car accidents, the tendency for people to claim injuries in these accidents is almost 200% higher than in the rest of the country, according to the most recent data. bodily injury claims data From the National Association of Insurance Commissioners (NAIC).

Additionally, the litigation rate, defined as the likelihood that auto insurance claims will involve litigation, is more than twice the national average and the second highest in the country after Florida. predictions It was published in October by the Insurance Research Council (IRC), an industry-supported group.

In a phone interview last week, Temple said both data points are consistent with much of the latest testimony presented to the Louisiana Legislature.

Auto insurance rates in Louisiana have been among the highest in the country for many years, with significant margins. Numerous legislative commissions were created monthly meeting We have been in a coordinated effort to resolve the issue since August. They are expected to meet by December and vote on legislative solutions next year.

At these meetings, lawmakers heard from researchers, insurance industry representatives, truck drivers, business owners, attorneys and others. Most testified that Louisiana has a legal environment that makes it easier to file personal injury lawsuits for quick monetary settlements that are not always guaranteed, but some disagree.

State lawmakers have not pressured insurance companies to disclose in detail how they calculate auto premiums, especially on how rates vary by zip code.

If lawmakers knew more about the algorithms used to generate quotes and calculate premiums, they would have a much better idea of ​​how to solve the crisis, said Ben Riggs, director of the insurance reform advocacy group Real Reform Louisiana. personal injury lawyers.

“We talked about everything except one thing we could do to lower insurance rates, and that’s how rates are set,” Riggs said in a phone interview. “It seems to me that it is impossible to address skyrocketing insurance rates without knowing how those rates are set.”

Temple, who made a career in the insurance industry before being elected last year to run the Louisiana Department of Insurance, said an insurance company’s rate algorithms are considered proprietary and hidden from the public in accordance with state law.

Such laws are common in many states and also apply to industries outside the insurance industry; Companies argue that they need privacy to remain competitive. Insurance rate algorithms may differ between companies and in some cases Developed with artificial intelligence programs or outsourcing to third-party risk management consultants.

Beyond data, little information

The insurance industry has been in contact with lawmakers and state officials since hearings began at the State Capitol in August to address the crisis. Few present any relevant research or propose data-driven solutions to lawmakers.

The commissioner said he was not advocating any side in the debate and simply wanted to follow the best available data. Besides the NAIC and IRC statistics he cited on bodily injury claims and lawsuits, lawmakers struggled to find much more that would single out Louisiana as deserving of the highest auto insurance premiums in the country.

Statistics Insurance Institute for Highway Safety Frequency of car crashes, traffic fatality rate, drunk driving, seat belt use and other relevant points show that Louisiana is relatively consistent or only slightly above national averages.

For example, Mississippi has the highest traffic fatality rate There are 23.9 deaths per 100,000 people in the country. That’s considerably higher than Louisiana’s rate of 19.7, but car insurance in Mississippi is nearly half the cost.

The NAIC and IRC’s findings may well support the insurance industry’s arguments for so-called “tort reform” measures that could make it harder to sue for car accidents; but some continue to dispute the data.

The NAIC is a standard-setting research organization for state insurance regulators across the country. Because it doesn’t represent insurance companies, its data generally isn’t subject to the same level of criticism as the IRC’s data. Because the insurance industry constitutes all of the IRC’s membership, its reports and analyzes are often subject to criticism from personal injury lawyers and skeptics.

according to IRCUses NAIC data on the number of cases filed and the number of claims closed to create case rate statistics.

prescriptive edition

Rep. Edmond Jordan, D-Baton Rouge, who also litigates personal injury cases, pointed out that Louisiana long had a one-year period from the date of injury to file a lawsuit until the Legislature passed changes this year. Lawyers call this the statute of limitations period. Jordan said such a short rule period could actually force people to file lawsuits quickly to avoid losing their right to sue, which could cause condensation in the IRC’s annual lawsuit rate data for Louisiana.

“The data is definitely skewed to the prescriptive period,” Jordan said. “Louisiana had a one-year statute of limitations, so of course you’re going to face more lawsuits each year compared to other states.”

Tennessee is the only other state with a one-year statute of limitations that applies to car accidents; but the same insurance industry data shows that residents file injury claims after accidents less frequently than the national average. In most other states, the deadline varies between two and three years.

Still, Jordan noted that lawmakers have passed a variety of different “tort reform” measures over the years, but that have failed. Changes made in 2020 included hearing more car accident cases before juries and reducing the amount of money insurance companies must pay to accident victims.

Supporters said these and other measures would result in lower premiums for drivers through competition as the market becomes friendlier to insurers. These discounts have not occurred yet.

“These were shots taken in the dark in the hopes of lowering insurance rates,” Jordan said. “We’ve been doing the things he’s talking about for the last 30 years and it’s never worked.”

Data doubts

Some believe the findings are flawed in other ways. Sen. Royce Duplessis, D-New Orleans, who also practices personal injury law, has repeatedly argued that more evidence is needed to show a direct link between any data point and higher insurance rates. Duplessis told his colleagues at the Oct. 11 committee meeting that mere correlation does not warrant wholesale changes to the law.

Temple noted that the insurance industry is the only available source for the data most lawmakers seek. So while it’s fair to examine the data and try to verify it, he said it’s unfair and impractical to immediately dismiss everything just because the statistics come from the insurance industry.

Among the many people who have testified so far, insurance industry representatives, academics and drivers dominate the conversation. They are often the only ones offering personal accounts of insurance claims and questionable auto accident cases, or offering data-driven recommendations that lawmakers can easily codify into legislation.

One of these concerns the civil law concept known as “collateral resources,” which prevents defendants from admitting certain types of evidence into court, with the result that juries may not receive a full and accurate account of the facts. The rule allows plaintiffs to sue for excessive medical bills they never actually had to pay.

MPs adopted legislation Earlier this year, it would have addressed the collateral source issue, but Gov. Jeff Landry, whose gubernatorial campaign received significant funding from plaintiffs’ attorneys, vetoed the measure.

Another big issue is the Housley presumption, a standard established by the Louisiana Supreme Court in 1991 through a precedent-setting case for automobile accidents, medical malpractice and other injury cases. In summary, it says that courts should assume that a plaintiff’s injuries resulted from the accident if he or she was in good health before the accident and signs of injury appeared afterward.

Housley conjecture controversy not new for the Legislature, but this is unique to Louisiana and is a lower standard of proof than those used in other states; That makes Louisiana an outlier in another important category in the auto insurance market, Temple said.

Jordan disagrees and said he believes some have misinterpreted the Housley conjecture or exaggerated its importance.

Lawmakers passed a bill to eliminate the Housley presumption in 2020, but vetoed by then-Gov. John Bel Edwards, who liked Landry, had the financial support of trial lawyers during his candidacy.

“We need to rebalance the system in Louisiana,” Temple said. “This situation is unbalanced and to the advantage of plaintiffs and plaintiff attorneys.”

Legislative sessions were expected to resume in November, but lawmakers may have their hands full with a newly called session. special session on financial matters.

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