By Catherine Hunt / LSU Manship School News Service
BATON ROUGE — Two bills that aim to lower car insurance premiums by limiting lawsuits will move to the House and Senate floors after legislative committees approved them this week.
House and Senate committees advanced the bills, sponsored by Republicans, in party-line votes. Their passage seems likely in both chambers, which are controlled by Republicans.
But Gov. John Bel Edwards, a Democrat, favors an alternative approach to try to lower insurance rates and lawmakers are waiting to see what he will support.
The bills, sponsored by Rep. Ray Garofalo, R-Chalmette, and Sen. Kirk Talbot, R-River Ridge, target Louisiana’s litigious climate, which Republicans say causes high insurance rates by making it too easy to file lawsuits after car accidents.
Louisiana drivers pay the second highest car insurance premiums in the country, following Michigan. Insurance Commissioner Jim Donelon, a Republican, testified that if the bills are passed, he would require insurance companies to reduce insurance premiums by at least 10 percent except in cases where the company could prove that the decrease would lead to insolvency.
He said that some of the rate cuts could reach 25 percent.
“Our claims-to-litigation ratio is the nation’s highest, and that’s the reason for high rates,” Donelon said.
Democrats said there is not much data to support the rate-cut estimates. They argue the legal changes proposed in the bills would make it more difficult for people who are seriously injured in auto accidents to collect the damages.
“These are pretty massive changes to our civil justice system that are based on pretty much a guess,” said Rep. Mandie Landry, D-New Orleans.
The House Civil Law and Procedure Committee voted 11-5 on Tuesday to send Garofalo’s bill to the House floor. Senate Judiciary Committee A voted 4-3 to advance Talbot’s bill.
The bills propose changing four major components of state law governing civil damages.
They would decrease the minimum monetary amount an injured party has to claim their injury is worth to have the case decided by a jury rather than a judge. The bills also would eliminate the ability for an injured party to directly sue an insurance company, lengthen the time people have to file lawsuits to encourage more settlements and throw out a rule that prohibits using evidence of a plaintiff receiving compensation from another source besides the defendant.
Proponents argue judges, who are elected, receive major donations from plaintiff’s lawyers and are more likely than juries to award significant damages. They also say Louisiana is one of the few states to allow injured people to sue insurance companies directly. These changes would encourage more insurance companies to write policies here, increasing competition and lowering rates.
“I’ve been told by virtually every member of the insurance community … that a 10 percent reduction is the minimum we should be expected to see,” Garofalo said.
Opponents contend that courts could become overcrowded if more cases are argued in front of juries rather than a judge .
Gov. Edwards supports a bill by Rep. Jay Luneau, D-Alexandria, that seeks to lower premiums by prohibiting insurance companies from setting rates based on demographic information, such as marital status, gender and credit scores.
Donelon, however, said these measures would not decrease rates.
“It won’t lower insurance costs for the state of Louisiana one penny,” he said. “It will just shift who the payers are and who the beneficiaries are.”
Some Democrat lawmakers questioned having tort reform discussion in the midst of the COVID-19 pandemic when it is difficult for the public to attend hearings and participate.
“Tort reform is far-reaching,” said Rep. Sam Jenkins, D-Shreveport. “It’s going to affect our courts. It’s going to affect the average person’s pocketbook. It’s going to affect the insurance companies that are involved. Everyone needs the opportunity to speak on it.”
Many new Republican legislators, such as Sen. Patrick McMath, R-Covington, focused their campaigns on tort reform. Former Democratic senators John Milkovich and Ryan Gatti did not win re-election bids. Talbot said they lost in part due to their opposition to tort reform.
During last fall’s election, Republicans won enough Senate seats to reach a supermajority but fell just short of a supermajority — or two-thirds of membership — in the House.
Edwards could use the threat of a veto to seek compromises that might alter parts of the bills. A two-thirds vote in both chambers of the Legislature is needed to override a veto.