Louisiana’s insurance crisis has left many homeowners, and now drivers, scrambling to keep up. According to a recent report, 63% of Louisiana homeowner’s insurance policyholders saw an increase in their policy premium over the past year. For those with flood insurance, 54% saw an increase in their cost of coverage. Now, auto insurance rates are also going up. According to the Louisiana Department of Insurance, Allstate rates are increasing by more than 18%, GEICO by more than 19%, and USAA by 34%.
“Insurance has skyrocketed for families, businesses and industries all over our state causing financial burdens and stress on people who don’t deserve it from a service that is supposed to help,” said newly elected Insurance Commissioner Tim Temple. “Everyone has felt the increase in pricing and the slow response across the insurance industry.” Temple won the race this week after his sole opponent, Democrat R.D. ‘Rich’ Weaver dropped out.
According to current commissioner Jim Donelon, relief is already on the way for some homeowners. The Insure Louisiana Incentive Program has already brought eight new insurance companies to the state, which will hopefully help to drive premiums down through increased competition. According to Donelon, 23,000 new policies have been written, and 7,000 homeowners have been taken out of Citizens, the state-run insurer of last resort. While most insurance agents recommend shopping for a new policy in October, when the most active part of hurricane season is over, Donelon says people should start looking now.
“I encourage anyone looking for a new policy to shop around at least once a month until you find coverage,” Donelon said.
Some legislatures feel that the state needs more tort reform, however, including measures that would make it harder for lawsuits. While Senate Bill 96, which immunized Louisiana Citizens from class action lawsuits for untimely payment of claims and bad faith penalties passed, other similar measures failed. But some consumer advocates say that isn’t the answer, and would only hurt policyholders.
“Louisiana needs real insurance reforms that increase competition, lower costs, and hold big insurance companies accountable. Instead, we keep getting higher rates and threadbare talking points from the insurance industry,” said Ben Riggs, executive director of Real Reform Louisiana, a nonprofit consumer advocate group. “Tort reform did not lower costs because litigation is not the cause of high insurance rates. Tort reform is a distraction deployed by the insurance industry to conceal the real reasons for high auto insurance rates.”
For auto insurance, those reasons are often income or credit related. According to a recent Consumer Federation of America study, safe drivers with bad credit pay 111% more than safe drivers with excellent credit in Louisiana. Given that Louisiana ranks 49th in average credit score, it’s no wonder that Louisiana drivers pay more.
“Louisiana will not begin to address our insurance crisis until we start listening to the people who are suffering the most and stop listening to these giant insurance corporations that profit from our pain,” Riggs said.
