Acting Louisiana Insurance Commissioner J. Robert Wooley is soliciting information from the insurance industry on the current regulatory and legislative climate in the state, a move toward insurance reform that, according to the National Association of Independent Insurers (NAII), is being praised by property/casualty insurers.
“We are extremely pleased to see Commissioner Wooley take such a proactive stance on reform in Louisiana,” said Greg LaCost, counsel for the NAII, which is providing Wooley with feedback on the market. “Louisiana’s outdated and restrictive insurance laws stifle competition among insurers and ultimately make it more expensive for them to do business in the state. The Commissioner’s attempts to streamline the form filing process is making a difference on the regulatory side, and we’re pleased to see him leading the charge to modernize Louisiana’s insurance laws as well.”
In a recent letter to Wooley, LaCost pointed out that because the cost of doing business in Louisiana is high and insurers’ inability to adequately price products because of tight rate restrictions required by the Louisiana Insurance Rating Commission makes conditions “extremely harsh,” especially in the current hard market.
Rate modernization based on Illinois’ competitive insurance market would alleviate the problem, although a temporary file-and-use or flex band system would also help in the short run. South Carolina instituted a temporary flex band system in 1999; since then, rates have decreased, the number of insurers competing in the state have doubled, and its residual market population plummeted, LaCost pointed out.
The more pernicious problem of the high cost of doing business in Louisiana revolves around lowering loss costs by reducing the jury threshold limit, phasing in mandatory arbitration, modifying the comparative negligence statute, and adding a viable fraud law, LaCost said.
“While I understand the political realities may be difficult, it nevertheless would be the best way to lower the cost of doing business in Louisiana,” he wrote. “All of these solutions would benefit Louisiana consumers as they would allow companies to write coverages that are more competitively priced.”
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