GOP lawmakers must keep up tort reform pressure

Louisiana’s Legislative Republicans wisely have launched a full-court press on tort reform, and must capitalize on the opportunity to build their case while exposing the fallacies of opponents that keep vehicle insurance rates artificially high.

This week, legislative committees dealing with insurance held interim meetings, after another round earlier this summer. Instigated by the supermajority-wielding GOP, these represent an attempt to gather data to make another run at tort reform after tepid 2020 legislation, watered down in response to objections by trial lawyer supporter Democrat former Gov. John Bel Edwards, seemingly has produced mixed results.

Trying to ascribe rate changes to policy is difficult because so many other factors may intervene. For example, Louisiana always will have upwards rate pressure because of its above-average propensity for natural disasters, compared to other states, which damages more vehicles.

Also a Louisiana-centric factor, crimes involving vehicles, principally theft and carjackings, have mushroomed since 2019 in New Orleans, with the resulting higher rates compounded by some insurers refusing to write policies for certain models in the state. And, rates aren’t immune from overall price inflation, which has increased over 20 percent and faster than wage growth since the 2020 election of Democrat Pres. Joe Biden and the party’s presidential nominee Vice Pres. Kamala Harris, which has triggered a large increase in rates since those reforms in 2021 kicked in.

Plus, it takes years for changes to fully impact rates. Particularly as rates are so dependent upon payouts from trials that can last years, these have to roll off the books before a relatively pure test of legal changes becomes reflected in payouts, then rates.

Regardless of the factors, in 2021 the typical national driver, using one hypothetical case, saw rates increase 1.8 percent, then in 2022 11.2 percent and in 2023 12.6 percent. In Louisiana, the same driver experienced increases of 0.7, 9.3, and 16.3 percent – slightly below average for the stretch. Throughout that period, the state stuck around fourth highest in rates.

Reviewing rates for minimum and full coverage for another kind of hypothetical driver, as of this month Louisiana ranked second highest for full and fifth for minimum, with some of that difference attributable to its relatively low minimum. Still, some states with significantly higher minimums have significantly lower rates (while New York, which tops both lists, has a comparable minimum.

But one thing is indisputable: states with significantly lower rates have demonstrably different laws governing the tort process than does Louisiana, a fact reform opponents – typically associated with trial lawyer lobbies whose members benefit from greater volume of court activity over claims and higher level of awards – go to extreme lengths from which to deflect attention. In general, these differences focus on transparency and incentives to not go to trial.

These things the Senate Insurance Committee Chairman Republican Kirk Talbot – the main sponsor of the 2021 changes – has emphasized so far in his committee’s hearings. By contrast, mainly apologists for the current laws across the panels have tried to steer away from these by bringing up factors from the plausible but minor – road quality, where Louisiana by one long-time study currently ranks 40^th but some worse have lower rates, and distracted driving, where Louisiana’s laws are among the mainstream of states but many states still have lower rates – and the comical in the stupidity these assume that anybody would buy them – executive salaries and marketing costs; if these are too high, then why do other states have much lower rates where these seem to be just an issue in setting Louisiana rates?

Without a systematic study, the best to be gleaned from the past three years is the reform probably pushed rates lower than they would have been, given the direction higher of other factors relative to other states. So, the real value of these hearings would be to produce more systematic evidence demonstrating that, as well as augmenting the theoretical cases so far being made, and in the process show the paucity of evidence for alternative explanations.

As one witness at one of the hearings noted, it took an extended period for Louisiana’s legal environment to become molded into an engine for increasing artificially rates. It will take a long time to change that and have the effects felt. That’s why on this need for change lawmakers must keep their foot on the gas and not let up to cut through resistance funded by the deep pockets of beneficiaries of the current broken system.