Louisiana Insurance Commissioner Tim Temple (pictured) has identified key reforms needed to stabilize the state's challenging auto and home insurance markets, with a focus on reducing excessive litigation and strengthening building codes.
Current data shows Louisiana residents are 2.3 times more likely to enter into litigation, and twice as likely to file a bodily injury claim, which directly impacts insurance premiums across the state.
“Claims equal premium at the end of the day,” Temple said in an AMBest report. “You’ve got to have money to pay claims.”
The state legislature has taken steps toward revitalizing the sector, implementing direct action reform and litigation funding transparency laws. But the latest push was stalled when Gov. Jeff Landry vetoed a collateral source bill, which would have reduced certain medical payment thresholds.
For property insurance, Temple says that state building codes must be raised to at least Fortified Roof program standards; the program standard has served as a model in neighboring Alabama.
“I'm told quite often from builders that the most recent building code standards adopted by the state (Louisiana) are 95% Fortified,” Temple noted. “I'm not sure if it is 80%, 90% or 99%, but if we're that close, I would argue we probably should go ahead and make that standard Fortified.”
The AM Best report shared recent success stories which point to the effectiveness of resilient construction. Terrebonne Parish, which financed and built its own protective levees, experienced no flooding during Hurricane Francine in September. Homes equipped with Fortified roofs are said to work.
The state has put in place a $30 million home hardening program to supplement such efforts, emulating what Alabama has done successfully, with already 50,000 Fortified roofs implemented.
“Fortified roofs work. We had several that were exposed to Hurricane Francine, and they all withheld it as designed,” Temple confirmed.
Louisiana residents are encouraged to reach out to their legislators to learn more about the comprehensive state reform.
Are you based in Louisiana? What do you think of these reforms? Will they affect insurance costs? Share your thoughts below.
