INSURANCE REFORM FALLS FLAT!
June 20th, 2022
Baton Rouge, Louisiana
INSURANCE REFORM FALLS FLAT!
Remember your ancient history of how Nero fiddled as Rome burned? Boy does that apply to the Louisiana legislature. Now we are talking about the state that has far and away the highest insurance rates in the nation. Yet in the recent legislative session, insurance reforms were all but ignored. Political columnist Clancy Dubos said it best when he wrote about the winners and the losers. Insurance companies were the big winners and Louisiana policyholders were hands down the big losers.
A newly released study by S&P Global Market Intelligence says that not only does Louisiana lead the country in having the highest insurance rates, but the gap between other states also continues to widen. For example, the Louisiana insurance department gave State Farm a 7.2% rate increase which was “the most-impactful single rate increase during the month of April” that applied to 1 million policyholders, who will pay $95.3 million more in premiums. Allstate received a 14.9 per cent increase.
Now remember it was two years ago when the legislature approved so called tort reform that the insurance commissioner promised would reduce auto insurance rates by 25%. So what happened? Have you checked your policy lately? Rather than rates going down, big rate increases continue to take place. Legislators were sold a bill of goods and they bought right into it. Now policy holders are paying the price. A Big price.
Got a teenage driver? Are you in for shock. Louisiana has the highest teen car insurance rates in the country. Your child will pay an average of $5,000 yearly, more than twice as much as teens in Mississippi and Alabama. In California, where they have an aggressive insurance commissioner who has really cracked down on insurance companies overcharging, the average teenager pays $1,805. That’s almost three times less than it costs a kid in Louisiana. In California, any request for a rate increase is closely scrutinized, and insurance companies are regularly examined. In Louisiana, as is regularly pointed out, insurance companies rule the roost.
In another example of why insurance rates are so high, Louisiana’s insurance department allows companies to charge higher rates to those drivers who do not have a high credit score. And even though credit scores have nothing to do with a person being a safe driver, a recent study by WalletHub found that Louisiana drivers pay anywhere from 60% to 135% more if they have poor credit scores.
The disparities allowed by the insurance department are numerous and staggering. For instance, wealthy drivers with a DWI pay less than drivers with a spotless record but a low credit score. And in numerous cases, African Americans pay significantly more, as much as 70%, for their car insurance than whites according to the Consumer Federation of America.
Douglas Heller, a nationally acclaimed auto insurance expert, makes no bones as to who is at fault over all these unfair disparities. “It’s not just the insurance companies are overcharging Louisianians with low credit scores. It’s that the state Department of Insurance hasn’t done anything to stop companies from these egregious premium hikes.” As Heller told legislators; “If you drive safely, you should pay the same price as anyone else who drives safely, regardless of your credit score. Your credit history should not matter.”
And how about this shocking Louisiana regulation! Did you know that there is a “widow penalty” allowed by the Department of Insurance? That’s right. If you have lost your spouse, you are changed as much as 15% more for your car insurance by many companies operating in Louisiana. Most states prohibit discriminating against widows, but not Louisiana. What a terrible message to send to someone who has lost their spouse. This widow penalty should be prohibited.
In a state plagued by the nations’ highest insurance rates, the legislature’s failure to address these serious insurance issues will be a big disappointment to Louisiana policyholders.
Peace and Justice
Jim Brown’s syndicated column appears each week in numerous newspapers throughout the nation and on websites worldwide. You can read all his past columns and see continuing updates at http://www.jimbrownusa.com. You can also look over a list of books he has published at www.thelisburnpress.com.