Friday, 01 April 2011 15:36

Louisiana Auto, Property Insurance Rates Highest In US

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      Christopher Tidmore    At $1,111, Louisiana experienced the highest median rate for auto insurance in the nation, according to in a recent survey from InsWeb, an online insurance seller.
        Perhaps even more shocking was the stark contrast that other Southern states were amongst the cheapest states to buy auto coverage. North Carolina ranked fifth lowest, at $495.   Virginia’s rate was seventh lowest, at $521. In 2010, it ranked 13th.

Tags:    Louisiana insurance, Louisiana auto insurance, Louisiana property insurance, Katrina, Citizens Insurance, Louisiana Insurance Commissioner, Louisiana Politics

      The closest Southern state to Louisiana was Florida, netting a 37th rank, at $750, one worse than last year.    Otherwise only the District of Columbia and Maryland came within striking distance of Louisiana, and neither broke the thousand dollar mark.  
         (InsWeb’s 2011 Car Insurance Rate Report ranks all 50 states and Washington, D.C., based on the median household car insurance rate for a six-month policy. To determine the rates, InsWeb uses a proprietary system that tracks the filed rates of the largest car insurance carriers in each state as well as actual profiles of InsWeb customers.)
         When it comes to property insurance, the latest figures also show that Louisiana is also at the top of the list for having the highest premium rates. The average national premium for home insurance is $690.62.   The cost for a Louisiana homeowner continued to be the highest in the country at $1392.  That is an increase of 0.2% from last year.
         Making matters potentially worse, Louisiana will see a 6.5% increase from its property insurer of last resort, Citizens, on July 1, 2011.   
         Understandably, the South does have a higher rate because of the hurricane threat.  The average homeowner premium for southern states is $801.75, which is 16.1 % above the national average. Still, costs in Louisiana are far higher than even our immediate neighbors pay.
        According to former Louisiana Insurance Commissioner Jim Brown, that is “no surprise, since Louisiana officials pay scant attention to insurance rates and make little effort to lower them.”
        As he explained, “What if you were to consider moving to The Bayou State, but were told there is a mandatory surcharge that applies in no other state, requiring you to pay the sum of $1100 or more, just for the privilege of living there?  And every other Louisiana citizen who buys a home and owns a car has to pay the same surcharge.  Would you move there?”
       “That is exactly what is happening in Louisiana now.  The surcharges are from the cost of insurance, and if you live in Louisiana, you now have to pay the highest premium costs in the nation.  And not just by a small amount when compared to other states.  Louisiana exists in its own world of escalating insurance costs that are completely out of line with the rest of the nation.”
        “Reasons for high rates in Louisiana are varied and numerous.  At the top of the list is the unfathomable creation of a hybrid state run insurance company called Citizens.  It has been called Louisiana’s biggest financial disaster, and reeks with corruption and ineptitude.  The financial records are so bad that the state auditor refused to issue an opinion of the company’s financial condition.  The cost to the taxpayers has now topped $2 billion.”
           As the insurer of last resort, Citizens' prices also affect the rest of the local insurance market.
           David Tidmore, a 45 year veteran of the local insurance market, having also served for 12 years as an underwriter for one of the nation’s largest insurance companies F&D (now the Zurich) and a VP for the world’s largest broker Marsh & McLennan, simply explained, “It is my opinion that the industry is driven by “Greed & Fear”.”
       “When times are good,” he continued, “greed prevails, the market softens, which means pricing is much more attractive. When times are bad, many claims, especially earthquakes and hurricanes, the market hardens, and fear prevails. After Katrina, the market hardened like concrete, especially in the personal lines area.”
      “Pricing shot up double or more and underwriting became very restrictive, ie. HO carriers, as well as commercial property carriers, refused to provide wind/hail, thus Citizens whose pricing for just these two perils is ‘out of sight’”.
       “As we moved away from Katrina, I have noted up until the beginning of this year softening but after the earthquake in Japan, the major reinsurers are tightening up, which within a year will hit the entire market and we will go into the fear mode.  Actually, there was a recent article advising that there are as many as 36 earthquakes per year in the northern hemisphere and these continued disasters will bear heavily on the fear attitude.”
          As for the reason Louisiana has the highest auto rates in the US, Tidmore outlined, “One of the coverages in an auto policy is comprehensive, which most folks perceive as windshield, but actually the most significant coverage therein is flood. What happened after Katrina, thousands of flood claims where cars were totaled so the fear factor was and evidently continues to be significantly in play.”
         Jim Brown, though, looks towards another reason.  Pointing at the large number of uninsured motorists tolerated in this state, versus elsewhere, he notes the higher liabilities to local ratepayers.  
        Since Brown's term in office, no Insurance Commissioner has put pressure on the legislature--or on local officials--to seize automobiles whose owners have been discovered to be without insurance.   Too often, he explained, both state officials and parish law enforcement just turn a proverbial blind eye, and the rest of us pay the price.
         As David Tidmore might say, call it the “Greed” of elected Sheriff’s not wanting to upset voters with tow trucks patrolling city streets for uninsured motorists, many of whom--regardless of their underwriting status--still vote.
 Christopher Tidmore is on the radio weekdays from 7-8 AM on WSLA 1560 AM, online at

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