Thursday, 20 August 2020 11:12

Louisiana bias premiums out of hand as "Good driving doesn't matter" Featured

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Say what?  I’m sure I’m not hearing this right.  After spending millions of dollars in lobbying for so called tort reform, and promising that limiting policyholders’ legal rights will cause a major reduction in the cost of automobile insurance, the industry seems to be taking an “about-face”.  Here’s what the Morning Advocate reported this week:

“Louisiana drivers will pay the highest prices for auto insurance in the nation next year despite having passed a sweeping tort reform law that was sold as a way to dramatically lower premiums by as much as 25%, an insurance industry executive, who was one of the primary forces behind the legislation, told a panel of primarily Republican businessmen and legislators, who helped pass the new law.”

The panel was told that “Lowering auto insurance rates really wasn’t the point of the tort reform legislation.”  So after the insurance commissioner told legislators that auto insurance rates would drop by 25% by the end of the year, we now learn that the whole lobbying effort by the insurance industry was a ruse.  A sham! The insurance industry will line their pockets at the expense of Louisiana policyholders.

Here are a few of the issues ignored by the legislature that should have been addressed in the recent legislative regular and special sessions. Louisiana has become tolerant of insurance companies that discriminate against certain driving categories.

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 charged as much as 15% more for your car insurance by many companies operating in Louisiana.  Most states prohibit discriminating against widows, but not Louisiana.  As Douglas Heller, a nationally acclaimed auto insurance expert, told legislators, “The fact that insurance companies charge more to perfectly safe drivers once their husband or wife passes away is both unnecessary and unseemly, and this widow penalty should be prohibited.”

If you are a blue-collar worker or if you do not have a college degree, a number of insurance companies operating in Louisiana charge you significantly more, by as much as 15%. I’m puzzled as to how that relates in being a safer driver. So unfortunately, you pay the insurance penalty if you have the wrong job title or if you don’t go to college. And there is absolutely no information or any data that shows this has any bearing at all on a policy holder’s safe driving record.

Louisiana’s insurance department also allows companies to charge higher rates to those drivers who do not have a high credit score.  Wealthy drivers with a DWI pay less than drivers with a spotless record but a low 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. 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 get this. Apparently Black lives do not matter all that much here in the Bayou State. African Americans pay significantly more, as much as 70%, for their car insurance than whites according to the Consumer Federation of America. Yet members of the legislature have failed to hold the insurance department accountable for allowing such unfair and discriminatory disparities.

Louisiana continues to be plagued by the nations’ highest insurance rates.  And a major reason is that the legislature and the insurance department continue to allow the favoring of a certain class of drivers over others. Policy holders all over the state are being shortchanged by the failure of those in charge to act and build fairness into the insurance regulatory system.

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Jim Brown

Jim Brown is a Louisiana legislator, Secretary of State and Insurance Commissioner.

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