MESSAGE OTHER TO U.S. STATES-
DON’T FOLLOW LOUISIANA’S LEAD!
You want to
know how not to have a good insurance climate?
Just take a look at the financial disaster taking place way down yonder
in Louisiana. Can you put lipstick on a
pig? Well, business leaders are certainly giving it their best shot in an
effort to counteract the fact that Louisiana’s outrageously expensive insurance
rates make the Bayou State an environment hostile to the attraction of new
businesses. But, last week, compounding
the problem, new figures showed automobile rates continue to rise, along with
insurance rates for every
And unfortunately, both legislators and insurance regulators are
assuming a blasé attitude -- “that’s just the price you have to pay for living
headlines blared out across the country about the skyrocketing insurance costs
of driving an automobile in Louisiana.
USA Today: “Louisiana Car Insurance Costs Most – the state can’t catch a break
.” The San Francisco Chronicle: “Louisiana
Tops State Rankings of Car Insurance Rates.”
National Auto Week: “Drivers
in Louisiana are hit hardest on Car Insurance Premiums.”
New York Daily News: “Louisiana has the nation’s most expensive
.” Similar headlines
appeared in newspapers coast to coast.
bad are the Louisiana rates? Compared to
surrounding states they’re stunning. At
an average rate of $2699, the Bayou State far outpaces its neighbors to win the
dubious distinction of having the highest car insurance rates in the
nation. Texas weighs in at $1,545, making
it over $1000 cheaper to insure in Texas than in Louisiana. To the east, Mississippi, a state that fares
worse than Louisiana on most lists, car insurance averages a paltry $1,345. Should it really cost $1,354 more for car
insurance in Louisiana than in Mississippi?
To the north, Arkansas comes in at $1,545, which is $1,154 less than
insuring in Louisiana. In every other
state in America, the cost of insuring a vehicle is not just less, but a lot
of Louisianans have a camp or beach property in Texas, Mississippi, Alabama or
Florida, where legal residence is claimed, in order to obtain a much cheaper
rate. Take note of some of your fellow
employees or neighbors who drive around your city with out of state license
plates. Even at the state capitol, some
of the top assistants to statewide officials drive cars registered in other
Louisiana rates so high and so out of line with the rest of the nation? Lawsuit abuse -- “It’s those damn lawyers,”
shout the insurance companies. But a
check of the laws shows that both Mississippi and Texas allow for punitive
damages that dramatically increase jury verdicts, where Louisiana does not
allow such damages. Doctors in Louisiana
only have to buy the first $100,000 of malpractice coverage, with a state fund
picking up the excess. The problems go
way beyond “those damn lawyers.”
about its wonderful differences and the special charm of living in the deepest
of the deep southern states, and rightfully so, when it comes to the culture,
music, food, architecture, plantation homes, football and ambience. But the lousy roads, drunk driving, uninsured
drivers, and poorly trained drivers are part of Louisiana’s differences as
well, and they aren’t so wonderful.
is regulation, or the lack thereof in Louisiana. In most states, there is a pre approval
system that requires insurance companies to submit a rate increase request to
the Department of Insurance. Yes, there
is a submissions process in Louisiana.
But, in Louisiana, the insurance company can go right ahead and raise
their rates before regulator review. This
makes as much sense as closing the gate after the horse is already out of the
brought a double whammy to Louisianans who buy insurance. On top of the rampant auto rates, Louisiana
homeowners really took it on the chin.
The state run Citizens Property Insurance Company has voted to borrow $100
million to pay for its own negligence.
The company has failed time and time again to follow the law, and from
its inception it has refused to institute even the most fundamental financial
standards that even the poorest run company would put into place as a matter of
course. There is little doubt that any neutral
observer would conclude what a headline in the local press summed up well: Citizens Property Insurance Company is the
most dysfunctional and incompetent agency in all of Louisiana state government.
run fiasco has received blistering criticism from Louisiana state treasurer,
John Kennedy. After Citizens voted to
borrow the $100 million last week, Kennedy didn’t hold back any punches. "This
company is insolvent and yet again it has decided to reach into the pocket of
taxpayers," Kennedy said Thursday. "It's
time for the legislature to revisit this concept. Let's talk about whether
there's a better way."
Kennedy is right that it’s far
past time to abolish this inept and feckless state created atrocity that was
doomed to failure from the beginning.
When you borrow money, there comes a time to pay the piper. Tragically, every Louisiana property owner
will have to cough up additional assessments on their property to pay for the
borrowing. And has there been any
legitimate necessity to borrow in the first place? There have been no major insurance claims in
the state. No hurricanes, flooding or hail
storms of any consequence. Not one
private insurance company has had to undertake deficit financing. If they did, any responsible insurance
department would have shut them down. Citizens
Property Insurance Company
will stick it to Louisiana homeowners for one reason -- to support its own continuing
If you add up the much higher
charges incurred by Louisiana insurance purchasers as compared to surrounding
states, the local folks are stuck paying out well over $1.5 billion a year
more. That’s $1.5 billion that has been
taken away from the local economy. It’s
$1.5 billion that Louisiana families could be using to educate their kids, and
improve their quality of life. It’s an
injustice to Louisiana taxpayers that elected officials seem unwilling to address. And all Louisiana families are the losers.
“It’s not hurricanes that are causing high insurance rates, but bad
analyst Michelle Minton
Brown’s syndicated column appears each week in numerous newspapers throughout
the nation and on websites worldwide. You can read all his past columns
and see continuing updates at http://www.jimbrownusa.com
. You can also hear Jim’s
nationally syndicated radio show each Sunday morning from 9 am till 11:00 am,
central time, on the Genesis Radio Network, with a live stream at http://www.jimbrownusa.com