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HB 489 Allows Insurance Companies to Impose Illegal and Excessive Rates on Louisiana Policyholders.

Real Reform Louisiana strongly opposes HB 489.

Louisiana is in the midst of an insurance crisis, as families are being priced out of their homes and small businesses are struggling to keep their doors open.

Louisiana cannot afford to make it easier for insurance companies to raise rates, which is precisely what HB 489 by Rep. Michael Huval does.

HB 489 allows insurance companies to increase prices on policyholders without first submitting those rates to the Commissioner of Insurance to ensure the rates comply with state law and are actuarially justified.

This rate-setting system could expose policyholders to illegal and excessive cost increases that Louisiana families and small businesses cannot afford. Moreover, the Commissioner would not be able to invalidate unjustified rates for more than four months after implementation.

Big insurance companies do not want to eliminate rate justification in order to lower rates.

HB 489 will lead to higher premiums for Louisiana policyholders, which is why Real Reform Louisiana strongly opposes this bill.

Ben Riggs
Executive Director Real Reform LA

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By Ben Riggs • February 16, 2024

Insurance Industry: "Credit Scores" Among Reasons for Louisiana's Rising Insurance Costs. A new report shows that auto insurance rates are skyrocketing, rising by 26% across the U.S. On average, Louisiana drivers pay $2,909 annually, roughly 6.53% of their income for auto insurance. Wayne Watley at Watley Insurance Group lists “credit scores” among the reasons for Louisiana’s rising auto insurance costs, including poor roads and uninsured motorists. Mr. Watley goes on to say, “It’s a challenge because we’re not one of the richest states, but we have some of the highest premiums.” He is correct—and the data backs him up. Insurance companies use credit scores to determine insurance rates for policyholders. Louisiana ranks 48th in median household income and 49th in average credit score . According to a recent study , safe drivers in Louisiana with poor credit pay 111% more than safe drivers with excellent credit ($1,505 / $713). Consequently, Louisiana has the second-highest auto insurance rates in the nation, which leads to more uninsured motorists, another primary cause of higher insurance rates. The use of credit scores in rate setting also creates perverse incentive structures that make Louisiana roads less safe. In Louisiana, safe drivers with poor credit pay an average of $905 more than drivers with a DWI and excellent credit ($3,548 / $2,643). Meanwhile, traffic fatalities increased by 21% from 2019 to 2022 in Louisiana, and the fatality rate per 100 million vehicle miles traveled increased by 18%, according to KPLC . Louisiana desperately needs real insurance reforms that lower costs, protect consumers, hold insurers accountable, and make our roads safer.