Temple relies on data to explain high auto insurance rates in La., but plaintiffs’ attorneys aren’t buying it

LOUISIANA (Illuminator Louisiana) – As state leaders search for answers as to why auto insurance rates are so much higher here than in other states, industry research shows that Louisiana has the highest frequency of injury claims and the second the highest litigation rate in the country.

Both data points are among the few statistics where Louisiana appears as an outlier, and Insurance Commissioner Tim Temple said they are likely among the main reasons for the skyrocketing auto insurance premiums in the state.

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

While Louisiana is only slightly above the national average when it comes to the frequency of car accidents, the tendency for people to claim injuries in those accidents is nearly 200 percent higher than the rest of the country, according to the most recent personal injury claims data from the National Association of Insurance Commissioners (NAIC).

Additionally, the litigation rate, which is defined as the likelihood that auto insurance claims will involve a lawsuit, is more than twice the national average and the second highest in the nation after Florida, according to appraisal launched in October by the Insurance Research Council (IRC), an industry-backed group.

In a phone interview last week, Temple said both data points line up with much of the recent testimony provided to the Louisiana Legislature.

For many years, auto insurance rates in Louisiana have been among the highest in the nation, and by significant margins. There were several legislative commissions monthly meeting since August in a coordinated effort to address the problem. They are expected to meet until December and eventually vote on legislative solutions next year.

In those meetings, lawmakers heard from researchers, insurance industry representatives, truck drivers, business owners, lawyers and others. Most testified to a Louisiana legal environment that made it easier to file personal injury lawsuits for quick monetary settlements that aren’t always warranted, though some disagreed with that notion.

State lawmakers have not pressed insurance companies to detail how they calculate their auto premiums, particularly how rates change by zip code.

If lawmakers knew more about the algorithms used to generate quotes and calculate premiums, then they might have a much better idea of ​​how to fix the crisis, according to Ben Riggs, director of Real Reform Louisiana, an insurance reform advocacy group. which receives funding from personal injury lawyers.

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

Temple, who had a career in the insurance industry before being tapped to lead the Louisiana Department of Insurance last year, said an insurance company’s rate algorithms are considered proprietary and kept from the public under state law.

Such laws are common in many states and apply to industries outside of insurance as well, with corporations claiming they need secrecy to remain competitive. Insurance rate algorithms may differ from company to company and are, in some cases, developed with artificial intelligence programs or outsourced to third party risk management consultants.

Beyond the data, little information

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

The commissioner said he was not advocating any particular side of the debate and just wanted to follow the best available data. Aside from the NAIC and IRC statistics he cited on personal injury claims and litigation, lawmakers were hard-pressed to find much else that would identify Louisiana as deserving of the nation’s highest auto insurance premiums.

Statistics from Insurance Institute for Highway Safety on car crash frequency, traffic fatality rate, drunk driving, seat belt use and other related points show Louisiana relatively consistent or only slightly above national averages.

For example, Mississippi has the largest road fatality rate in the country with 23.9 deaths per 100,000 inhabitants. That’s considerably higher than Louisiana’s rate of 19.7, but auto insurance in Mississippi is almost half the cost.

The NAIC and IRC findings could support the insurance industry’s case for so-called “tort reform” measures that could make it more difficult to file lawsuits in car accidents, though some continue to dispute the data.

The NAIC is a research organization that sets standards for state insurance regulators across the country. It does not represent insurance companies, so its data generally does not attract the same level of criticism as the IRC’s data. The insurance industry comprises the entire membership of the IRC, so its reports and analysis are often criticized by personal injury lawyers and skeptics.

right IRCuses NAIC data on the number of lawsuits opened and the number of claims closed to create its litigation rate statistics.

Prescriptive pressure

Rep. Baton Rouge Rep. Edmond Jordan, who also practices personal injury litigation, pointed out that until the Legislature passed this year’s changes, Louisiana had long had a one-year deadline from of an injury to file a lawsuit, which lawyers call the statute of limitations. Such a short statute of limitations can force people to file lawsuits quickly so they don’t lose their legal rights, and that can cause concentrations in the IRC’s annual litigation rate data for Louisiana, Jordan said.

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

Tennessee is the only other state with a one-year statute of limitations that applies to auto accidents, yet the same insurance industry data shows that its residents file claims for injuries after wrecks less frequently than the national average. The deadline in most other states ranges from two to three years.

However, Jordan pointed out that lawmakers have passed a variety of different “tort reform” measures over the years without success. Changes made in 2020 included allowing more car accident cases to be tried in front of juries and reducing the amount of money insurance companies have to pay out to accident victims.

Supporters said these and other measures would lead to lower premiums for drivers through competition, as the market would become more insurer-friendly. These reductions have not yet materialized.

“These are shots in the dark in hopes of lowering insurance rates,” Jordan said. “We’ve done the things they’ve been talking about for the last 30 years and it hasn’t worked at all.”

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 of the data points and high insurance rates. The mere correlation does not warrant major changes to the law, Duplessis told his colleagues at an Oct. 11 committee meeting.

Temple pointed out that the insurance industry is the only source available for most of the data lawmakers seek. So while it might be right to examine and try to verify the data, it’s unfair and impractical to immediately dismiss everything simply because the statistics come from the insurance industry, he said.

Among the many people who have testified so far, insurance industry representatives, academics and drivers dominate the conversation. They are, for the most part, the only ones who have either provided personal accounts of insurance claims and dubious auto accident lawsuits, or offered data-driven proposals that lawmakers can easily translate into legislation.

One of these relates to the civil law concept known as “collateral source” which prevents defendants from admitting certain types of evidence in court and as a result juries may not get a full and accurate account of the facts . The rule allowed plaintiffs to sue for excessive medical bills they never had to pay.

lawmakers passed a law earlier this year, it would have addressed the collateral source issue, but Gov. Jeff Landry, whose gubernatorial campaign received significant funding from the plaintiff’s attorneys, vetoed the measure.

Another important issue is the Housley presumption, a standard that the Louisiana Supreme Court created for car accidents, medical malpractice and other personal injury cases in a precedent-setting case in 1991. In short, it says courts would must assume that the plaintiff’s injuries resulted from an accident if he was healthy before the accident and the symptoms of the injury appeared afterward.

The debate over the Housley presumption is not a new one for the Legislature, but is unique to Louisiana and represents a lower standard of proof than that used in other states, which Temple said makes Louisiana an outlier in another significant category in the auto insurance market.

Jordan disagrees and said he believes some misinterpret the Housley presumption or overestimate its significance.

Lawmakers passed a bill in 2020 to eliminate the Housley presumption, but it was vetoed since then-Gov. John Bel Edwards, who like Landry, had the financial backing of trial lawyers in his run for office.

“We need to rebalance the system in Louisiana,” Temple said. “It’s lopsided and to the advantage of plaintiffs and plaintiffs’ attorneys.”

Legislative hearings were expected to resume in November, although lawmakers may have their hands full with a newly appointed special session on fiscal issues.

Illuminator Louisiana is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. The Louisiana Illuminator maintains its editorial independence. Contact editor Greg LaRose with questions: [email protected]. Watch the Louisiana Illuminator Facebook and X.