A Senate committee on Tuesday voted down a package of changes to the state’s legal system that advocates said might help to lower auto insurance rates.
House Bill 372 by Rep. Kirk Talbot, R-River Ridge, which passed the House of Representatives by a 69-30 margin, was considered a top priority by business lobbyists.
The bill seeks to lower the state’s threshold for requiring a civil jury trial to $5,000 from the current $50,000, by far the highest in the nation. It would also take away the ability to sue an insurance company directly, allow judges and juries to review a plaintiff’s medical costs, and extend the time limit to file a lawsuit from one year to two.
While nothing in the bill mandates lower insurance rates, it would require annual reviews by the insurance department for three years after the changes are enacted and require insurers to lower rates if their costs go down.
Supporters said the measure targets areas in which Louisiana is an outlier nationally, arguing the state’s legal climate discourages insurers from even writing policies in the state. Commercial insurance in particular is in crisis, they say, with skyrocketing rates and very few options for businesses.
But opponents said that, while the changes might boost insurance company profits, there was scant evidence consumers would benefit. Some suggested the insurance commissioner already has tools at his disposal to push for lower rates, and noted that many factors that contribute to auto insurance rates were not included in what Talbot claimed was an “omnibus” auto insurance bill.
The bill was deferred by the same Senate Judiciary Committee last week to allow legislative staff to estimate the fiscal impact. That fiscal note, citing the Louisiana Supreme Court, predicts a 33 percent to 50 percent increase in civil jury trials, increasing general fund expenses by “an indeterminable amount” as the state reimburses district courts for the added costs.
The note surprised advocates by suggesting extending the amount of time to file suit might lead to more settlements of lawsuits against the state. The fear is that someone could wait until right at the deadline to file the claim, and it would be difficult to prepare a defense because almost two full years had passed.