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From nola.com:
Drivers in Louisiana already pay some of the highest rates for car insurance in the country. A new report suggests local drivers also lead the country in the amount they overpay for coverage.
Drivers with car insurance policies in Louisiana paid $3,111 a year on average for 12-month coverage in 2018, the highest rate in the nation, according to data analyzed by Gabi, an insurance comparison website and app. Gabi’s analysis looked at premiums paid by more than 130,000 users nationwide, comparing them to average rates in each region for multiple major insurance companies.
To develop the analysis, drivers shared information with Gabi about how much they pay for insurance and basic policy details. Gabi then took that information and compared it to averages for that type of driver and policy, among multiple major insurance companies. The analysis found the average Louisiana driver paid roughly $1,159 more than they could have for car insurance in 2018.
That was more than a third of the total average premium paid by local drivers, and the highest amount overpaid in all 50 states.
Louisiana remains among the most expensive states for car insurance because of a number of factors, including a high rate of uninsured drivers as well as a high rate of auto litigation. Many Louisiana drivers who do buy insurance have minimum coverage. As a result, many turn to the courts to get larger payouts in the case of a serious accident.
Last year, state regulators approved rate hikes for multiple insurers, though there are signs rates may be leveling out. State Farm said in February it would cut auto rates by 3.2 percent this spring. State Farm insures roughly a third of all Louisiana drivers.
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Nationwide, a rise in accidents caused by distracted driving, linked to growing smartphone use in vehicles, has led to rising rates. Distracted drivers killed 3,450 people and injured another 391,000 in 2016, according to the latest data from the National Highway Traffic Safety Administration.
In an emailed explanation, Hanno Fichtner, CEO of Gabi, noted a number of factors affect how much an individual pays for car insurance, including one’s credit score and where you live. (Cities have a higher density of drivers and tend to have more accidents reported, thus higher premiums.)
Rates are also lower in states like Maine where there are many different insurance providers and competition is high, Fichtner said. Maine drivers paid an average premium of $1,447 a year in 2018, according to the Gabi analysis. Still, Maine drivers overpaid for insurance, to the tune of about $673 a year, or nearly half the total average 12-month payment.
The one way drivers can consistently lower their auto insurance rate? Shop around, the report says.
Indeed, Louisiana Insurance Commissioner Jim Donelon has repeatedly urged drivers facing a rate hike to shop for a new policy. Insurers in Louisiana get one rate increase or decrease per year. Officials recommend reassessing your coverage options at least once a year.
Here’s a look at the top 10 states where Gabi found drivers overpay for car insurance the most. States are ranked by the total amount overpaid on average.
Big Insurance's Louisiana Boondoggle. Former Missouri State Insurance Commissioner Jay Angoff recently testified before the Louisiana Senate Judiciary A Committee. The former commissioner reviewed data provided by insurance companies to the National Association of Insurance Commissioners (NAIC). The hearing and most of the data presented focused on personal and commercial auto insurance. A key takeaway on personal auto from the NAIC data was that Louisiana's insurance market is competitive and profitable. This revelation was particularly interesting because it undercuts Commissioner Tim Temple's analysis of the Louisiana insurance market and his legislative agenda. Commissioner Temple has repeatedly stated: "If we get more companies in Louisiana, then that helps solve issue number one which is availability. Once you have more companies in Louisiana, that helps work on problem number two which is affordability.” Yet, the data presented by former Commissioner Angoff painted an entirely different picture.
Expert, Former Commissioner Testifies on Louisiana's Insurance Market. Former Missouri State Insurance Commissioner Jay Angoff recently testified before the Louisiana Senate Judiciary A Committee. The former commissioner reviewed Louisiana’s insurance regulations, other states’ laws, and information provided by insurance companies to the National Association of Insurance Commissioners (NAIC). Mr. Angoff provided a detailed, data-filled report on Louisiana's insurance market. He explained how lax regulations that make Louisiana an extreme outlier contribute to high insurance rates. Additionally, he discussed the high returns insurers are seeing on policies in Louisiana and the massive profits rolling in on investments on their $1 trillion surplus. Below are highlights from the hearing and a copy of Mr. Angoff's complete report and testimony.
New U.S. Senate Report Shines Light on Louisiana's Insurance Crisis. In 2024, Commissioner Tim Temple and lawmakers repealed a crucial safeguard for Louisiana policyholders, allowing insurers to cancel home insurance policies at will. This alarming change took effect on January 1, 2025, leaving policyholders vulnerable. Why is this important: The increased threat of severe weather has led to a rampant increase in non-renewals nationwide. The New York Times reports that "since 2018, more than 1.9 million home insurance contracts nationwide have been dropped. In more than 200 counties, the nonrenewal rate has tripled or more." This is all according to findings in a new report from the U.S. Senate Budget Committee. T h e report notes that "Florida and Louisiana — the top two states by non-renewal rate in 2023 — also experienced 280% and 267% increases, respectively, in non-renewal rate percent change from 2018 – 2023." Lafourche, Terrebonne, and Jefferson Parishes have among the highest non-renewal rates in the nation for 2023. Orleans, Terrebonne, and Tangipahoa Parishes have suffered among the largest increase in non-renewals.
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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.
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Safe drivers with bad credit are penalized in Louisiana, leading to higher auto insurance rates.