As state leaders look for answers as to why auto insurance rates are so much higher here than in other states, industry research shows Louisiana has the highest frequency of injury claims and the second highest litigation rate in the country. Both data points are among the few statistics in which Louisiana appears as an outlier, and Insurance Commissioner Tim Temple said they are likely among the primary reasons for skyrocketing car insurance premiums in the state. But lawyers and plaintiffs’ advocates say the numbers, some of which they note come from the insurance industry, could be flawed and may not speak to the root of increasingly unaffordable coverage in a state that already struggles with poverty. While Louisiana is only slightly above the national average when it comes to the frequency of car accidents, the tendency for people to claim they were injured in those accidents is nearly 200% higher than the rest of the country, according to the most recent bodily injury claims data from the National Association of Insurance Commissioners (NAIC). Additionally, the litigation rate, which is defined as the likelihood that auto insurance claims will involve a lawsuit, is more than twice the national average and the second highest in the country behind Florida, according to estimates released in October by the Insurance Research Council (IRC), an industry supported group. In a phone interview last week, Temple said both data points align with much of the recent testimony provided to the Louisiana Legislature. For many years, auto insurance rates in Louisiana have been among the highest in the nation and at significant margins. Multiple legislative committees have been meeting monthly since August in a coordinated effort to address the problem. They are expected to meet through December and ultimately vote on legislative solutions next year. In those meetings, lawmakers have heard from researchers, insurance industry representatives, truck drivers, business owners, lawyers and others. Most have testified about a legal environment in Louisiana that has made it easy to file bodily injury lawsuits for quick monetary settlements that aren’t always warranted, though some disagree with that notion. Ben Riggs, director of Real Reform Louisiana, an advocacy group that receives funding from personal injury lawyers, said state lawmakers have never actually asked insurance companies to detail how they calculate auto insurance premiums, particularly in regards to how rates change according to zip code. If lawmakers knew more about the algorithms used to generate quotes and calculate premiums, then they would have a much better idea of how to solve the crisis, according to Riggs. “We have talked about anything and everything we could possibly do to lower insurance rates except for one thing, and that’s how the rates are made,” Riggs said in a phone interview. “It would seem to me it’s impossible to address skyrocketing insurance rates without knowing how those rates are made.” Temple, who made a career in the insurance sector before he was elected to run the Louisiana Department of Insurance last year, said an insurance company’s rate algorithms are considered proprietary and kept hidden from public view in accordance with state law. Such laws are common in many states and also apply to industries outside of the insurance sector with corporations arguing they need the secrecy to remain competitive. Insurance rate algorithms can differ across companies and are, in some cases, developed with artificial intelligence programs or outsourced to third party risk-management consultants. Beyond data, little info The insurance industry has been engaged with lawmakers and state officials since hearings at the State Capitol to address the crisis began in August. Few others are offering lawmakers any relevant research or proposing data-driven solutions. The commissioner said he’s not advocating for any particular side in the debate and wants only to follow the best data available. Aside from the NAIC and IRC stats he cited on bodily injury claims and litigation, lawmakers have been hard pressed to find much more that would single out Louisiana as deserving of the highest car insurance premiums in the country. Statistics from the Insurance Institute for Highway Safety on the frequency of car accidents, rate of traffic fatalities, drunk driving, seat belt use and other related points show Louisiana relatively consistent or only slightly above national averages. For example, Mississippi has the highest traffic fatality rate in the country with 23.9 deaths per 100,000 residents. That’s considerably higher than Louisiana’s rate of 19.7, yet auto insurance in Mississippi is nearly half the cost. The NAIC and IRC findings could well support the insurance industry’s arguments for so-called “tort reform” measures that could make it more difficult to file lawsuits in car accidents, though some continue to dispute the data. The NAIC is a standard-setting research organization for the state insurance regulators across the country. It does not represent insurance companies, so its data doesn’t generally attract the same level of criticism as the IRC’s data. The insurance industry comprises the entirety of IRC’s membership, so its reports and analysis often come under criticism from personal injury attorneys and skeptics. According to the IRC, it uses NAIC data on the number of lawsuits opened and number of claims closed to create its litigation rate statistics. Prescriptive pressure Rep. Edmond Jordan, D-Baton Rouge, who also practices personal injury litigation, pointed out that until the Legislature passed changes this year, Louisiana for a long time had a one-year deadline from the date of an injury to file a lawsuit, which lawyers call a prescriptive period. Such a short prescriptive period can essentially force people to quickly file lawsuits so as to not lose their litigation rights, and this can cause concentrations in the IRC’s annual litigation rate data for Louisiana, Jordan said. “The data is certainly skewed by the prescriptive period,” Jordan said. “Louisiana had a one-year prescriptive period, so of course you’re gonna have more litigation per year compared to other states.” Tennessee is the only other state with a one-year prescriptive period that applies to auto accidents, yet the same insurance industry data show its residents file injury claims after wrecks less frequently than the national average. The deadline in most other states ranges from two to three years. Jordan said lawmakers have approved different “tort reform” measures over the years. Changes made in 2020 included having more auto accident cases tried before juries and reducing the amount of money insurance companies have to pay out to accident victims. Supporters said these and other measures would result in lower premiums for drivers through competition, as the marketplace would become friendlier to insurers. Those reductions have yet to materialize, Jordan said. Data doubts Some believe the findings are flawed in other ways. Sen. Royce Duplessis, D-New Orleans, who also practices personal injury law, has repeatedly argued that more evidence is necessary to show a direct link between any of the data points and high insurance rates. Mere correlation doesn’t warrant wholesale changes to the law, Duplessis told his colleagues in an Oct. 11 committee meeting. Temple pointed out that the insurance industry is the only source available for most of the data lawmakers are seeking. So while it might be fair to scrutinize and try to verify the data, it’s unfair and impractical to immediately dismiss everything simply because the stats come from the insurance industry, he said. Among the many people who have testified so far, insurance industry representatives, academics and drivers are dominating the conversation. They are, for the most part, the only ones who have either provided personal accounts related to insurance claims and dubious auto accident lawsuits or have offered data-driven proposals that lawmakers can easily adapt into legislation. One of those deals with the civil law concept known as “collateral source” that prevents defendants from admitting certain types of evidence into court, and as a result, juries may not be getting a full and accurate account of the facts. The rule has allowed plaintiffs to sue for excessive medical billings they never actually had to pay. Lawmakers passed legislation earlier this year that would have addressed the collateral source issue, but Gov. Jeff Landry, whose gubernatorial campaign received significant funding from plaintiff’s lawyers, vetoed the measure. Another big issue is the Housley presumption, a standard that the Louisiana Supreme Court created for auto accidents, medical malpractice and other injury cases through a precedent-setting 1991 case. In a nutshell, it says courts should presume a plaintiff’s injuries resulted from an accident if they were in good health prior to the accident and symptoms of the injury appeared thereafter. The Housley presumption debate is not a new one for the Legislature, but it is unique to Louisiana and is a lower standard of evidence than that used in other states, which Temple said makes Louisiana an outlier in another significant category within the auto insurance market. Lawmakers passed a bill in 2020 to remove the Housley presumption, but it was vetoed by then-Gov. John Bel Edwards, who like Landry, had the financial backing of trial lawyers in his run for office. “We need to rebalance the system in Louisiana,” Temple said. “It is out of balance and well to the advantage of the plaintiffs and plaintiff attorneys.” “They misconstrue and misinterpret the Housley presumption,” Jordan said. “These are shots in the dark in the hope they will reduce insurance rates. We’ve been doing this stuff they’ve been talking about for the last 30 years has not worked at all.” The legislative hearings were expected to resume in November, though lawmakers might have their hands full with a newly-called special session on fiscal matters.