Louisiana's Auto Insurance Affordability: Challenges and Opportunities

Introduction

Louisiana's personal auto insurance affordability has shown slight improvement, yet it remains the least affordable state in the U.S. Despite a decrease from 2.93 percent to 2.67 percent of median household income between 2020 and 2022, the state's insurance cost drivers are significantly higher than the national average.

Cost Drivers Analysis

Dale Porfilio, Triple-I's chief insurance officer and president of the Insurance Research Council (IRC), highlighted several key cost drivers in Louisiana. Accident frequency is 16 percent higher, repair cost severity is 9 percent higher, and injury claim relative frequency is 49 percent, compared to the national average of 25 percent. Medical utilization is 47 percent higher, attorney involvement is 24 percent higher, and underinsured motorists are over 35 percent in multi-car accidents, compared to the U.S. average of 16 percent. Claims litigation in Louisiana is more than twice the national average, second only to Florida.

Policy and Market Dynamics

Porfilio emphasized that reducing overall expected losses is crucial for improving auto insurance affordability. The combination of high insurance expenditures and low median income, along with the frequency of hurricanes, makes it challenging to lower costs. In 2020 and 2021, insurers paid out over $23 billion in insured losses from over 800,000 claims filed due to hurricanes Laura and Ida. While a $45 million fund approved in February 2023 aims to stabilize the market, more work is needed to reduce costs for consumers and insurers.

For readers, it's important to stay informed about local insurance policies and consider bundling insurance policies to potentially reduce costs. Comparing rates from multiple insurers and maintaining a good driving record can also help in securing more affordable auto insurance.