Louisiana Record

Thursday, May 28, 2020

Donelon says working for tort reform is critical for lower insurance rates

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By Zeta Cross | Mar 2, 2020


Louisiana Insurance Commissioner Jim Donelon defended his efforts to get relief for consumers who are burdened with high auto insurance rates in a recent interview. 

Donelon told the Louisiana Record that he has made progress in the past two years, approving rate decreases for 1.5 million policyholders.

However, Donelon said, the key to meaningful improvement in auto insurance availability and in rate decreases hangs on what the legislature can accomplish this year when it comes to tort reform. 

“Our tort system needs fixing. My staff and I stand ready to work with legislators to bring meaningful reforms in our state,” Donelon said. 

He said the state's claims-to-litigation rate is the highest in the nation, and that the market for both personal passenger and commercial auto insurance "is tough" because of outmoded laws. 

The highest insurance rates in the state are in Orleans, St. Bernard, Jefferson, Plaquemines and East Baton Rouge and its surrounding parishes, Donelon said. Greater New Orleans area rates are 25 percent higher than the statewide average, and the Greater Baton Rouge area rates are 13 percent higher, he said. 

Donelon believes that the single most important thing as commissioner that he can do for Louisiana consumers is to work with legislators on meaningful tort reform to improve the legal climate in the state.

“Many legislators have expressed interest in supporting us as we work to lower rates for policyholders,” he said. “We have been sharing our knowledge and expertise with all interested parties ahead of the upcoming session.” 

Donelon is a supporter of the Omnibus Premium Reduction Act of 2020, also known as House Bill 9, introduced by state Rep. Ray Garofalo, R-Chalmette. Donelon said Louisiana is an outlier when it comes to certain elements of state tort law. 

Two areas of tort reform would go a long way to making Louisiana more competitive and affordable when it comes to auto insurance, he said.

One is the state threshold for jury trial. Donelson would like to see that reduced from $50,000 – the highest in the nation – down to $5,000. Donelson also said he hopes Louisiana will extend the time allowed to file a lawsuit from one year to two years. Both of those reforms would bring Louisiana tort law more in line with that in other states, he said.  

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Louisiana Department of Insurance