Legislative reforms enacted in 2024 are a positive initial step towards improving Louisiana's insurance market, according to the Insurance Information Institute (Triple-I). The state's market has been plagued by excessive claims litigation and attorney involvement, leading to increased costs and premium rates. However, further action is needed from state lawmakers, as highlighted in the report "Trends and Insights: Louisiana Insurance Market" published by Triple-I.
Sean Kevelighan, CEO of Triple-I, stated that with the leadership of its insurance commissioner, Louisiana is potentially on a path to stabilizing its insurance market. He emphasized the importance of continued progress amidst challenges posed by attorneys who increase insurance costs for everyone.
Research conducted by the Insurance Research Council (IRC), an affiliate of The Institutes like Triple-I, reveals that Louisiana ranks among the least affordable states for personal auto and homeowners insurance. In 2022, residents paid an average annual expenditure of $1,588 for auto insurance—nearly 40% above the national average. Homeowners in Louisiana also face higher costs than elsewhere in the U.S., with an average annual expenditure of $2,178.
Dale Porfilio, chief insurance officer at Triple-I and president of IRC, noted that multiple major weather events have led to extensive litigation following each natural disaster. Rising auto-repair and construction costs combined with relatively low household income exacerbate these issues. He cited Hurricane Laura in 2020 and Hurricane Ida in 2021 as significant contributors to soaring combined ratios for homeowners' insurers during those years.
The report's key findings include:
- To offset the 2021 ratio, Louisiana homeowners insurers would need a combined ratio averaging 85 over 24 years.
- Residents spend an average of 2.7% of their income per car annually on auto coverage.
- Injury claim frequency in vehicle accidents is nearly double the national average.
- Low personal income relative to other states contributes to affordability problems exacerbated by litigation.
The Insurance Information Institute serves as a comprehensive source for data-driven research studies on insurance without lobbying or selling policies. It aims to empower consumers through objective information rooted in economic and actuarial soundness.