Triple-I Blog | Despite Improvements, Louisiana Is Still Least Affordable State for Auto Insurance

Max Dorfman, Analysis Author, Triple-I

Louisiana’s private auto insurance coverage affordability improved to 2.67 p.c of median family revenue in 2022 – down from 2.93 p.c in 2020 – however it retains the doubtful distinction of being the least reasonably priced state, Triple-I’s chief insurance coverage officer informed the Louisiana Home Insurance coverage Committee in latest testimony.

Dale Porfilio – who is also president of the Insurance coverage Analysis Council (IRC) – mentioned that by practically each metric the state’s insurance coverage price drivers are effectively above the nationwide common:

• Accident frequency – Louisiana is 16 p.c larger than the nationwide common;
• Restore price severity – Louisiana is 9 p.c larger;
• Harm declare relative frequency – Two out of each 4 property injury claims (when vehicles hit vehicles) in Louisiana end in bodily damage claims (49 p.c), twice the one out of each 4 (25 p.c) throughout all states;
• Medical utilization – Louisiana is 47 p.c larger;
• Lawyer involvement – Louisiana is 24 p.c higher;
• Underinsured motorists – At-fault drivers in Louisiana have inadequate legal responsibility insurance coverage limits in over 35 p.c of multi-car accidents, over twice the 16 p.c U.S. common; and
• Claims litigation – Litigation over private auto claims in Louisiana is greater than twice the nationwide common, surpassed solely by Florida.

Porfilio famous that for auto insurance coverage affordability to enhance, total anticipated losses will have to be lowered. Laws to cut back a number of of those key price drivers can be useful, Porfilio mentioned.

As Triple-I and IRC beforehand reported, the mixture of excessive insurance coverage expenditures and low median revenue make Louisiana a tough state by which to decrease prices. The frequency of hurricanes hitting the state will increase householders insurance coverage prices, and the excessive price of reinsurance has contributed to the Louisiana’s insurance coverage woes.

Actually, in 2020 and 2021, within the wake of Hurricane Laura and Hurricane Ida, insurers paid out greater than $23 billion in insured losses from over 800,000 claims filed.

Whereas Louisiana policymakers have been assured a $45 million fund accredited in February 2023 to encourage insurers to write down property insurance coverage enterprise within the state would assist stabilize the market, insurance coverage commissioner Jim Donelon acknowledged that the accredited grants are solely step one towards decreasing householders’ insurance coverage charges.

As Porfilio’s testimony demonstrated – and the market has dictated – extra work is required to decrease prices for shoppers and insurers in Louisiana.