More Reforms Needed to Stem Legal System Abuse in Louisiana Insurance Market; Households Pay Significantly More for Coverages in Bayou State Compared to Other States: Triple-I

For Immediate Release 
New York Press Office: 917-208-8842, lorettaw@iii.org 

MALVERN, Pa., Jan. 22, 2025 – Legislative reforms made in 2024 are a positive first step toward repairing Louisiana’s insurance market, which has long suffered from excess claims litigation and attorney involvement that drives up costs and, ultimately, premium rates. But more work is needed by state lawmakers, according to the new report Trends and Insights: Louisiana Insurance Market published by the Insurance Information Institute (Triple-I).

“Louisiana, with the leadership of its insurance commissioner, is potentially on the path toward stabilizing its insurance market,” said Triple-I CEO Sean Kevelighan. “We have also seen in states such as Florida that comprehensive legal reform works. Louisiana has more to do, and we hope the progress being made stays on course. As we continue to be inundated in this country by the likes of billboard attorneys preying on vulnerable Americans and increasing insurance costs for everyone, now is the time for more action.” 

Research by the Insurance Research Council (IRC) – like Triple-I, an affiliate of The Institutes – shows Louisiana to be among the least affordable states for both personal auto and homeowners insurance. In 2022, the average annual expenditure for auto insurance in Louisiana was $1,588, nearly 40% above the national average.

Louisianans also pay significantly more for homeowners insurance coverage than the rest of the nation, with an average annual expenditure of $2,178—among the highest rates in the U.S. This represents 3.81% of the state's median household income—54% above the national average.

“The state has faced multiple major weather events, with extensive litigation following each natural disaster,” said Dale Porfilio, FCAS, MAAA, chief insurance officer at Triple-I. “Rising auto-repair and construction costs, combined with the state’s relatively low household income, have compounded these issues.”

Porfilio, who is also president of the IRC, noted that combined ratios for writers of homeowners insurance coverage in Louisiana soared in 2020 and 2021, due primarily to hurricane-related losses.

“The largest property loss events in those years were Hurricane Laura in 2020 and Hurricane Ida in 2021,” he said.

Combined ratio – the common measure of insurer underwriting profitability – represents the difference between claims and expenses paid versus premiums collected. A ratio below 100 shows an underwriting profit; one above 100 indicates an underwriting loss.

Key findings of the report:

• Louisiana homeowners insurers would have to average a combined ratio of 85 for 24 years to offset the 2021 ratio.
• Louisiana residents pay 2.7% of income on average, per car, per year with nearly 50% going toward coverage for auto injuries, rather than car repairs.
• 1.3% of average household income is spent on coverage for auto injuries in Louisiana compared to 0.6% nationwide.
• The relative injury claim frequency in Louisiana is nearly double the national average, with 49% of vehicle accidents resulting in bodily injury claims.
• Louisiana’s low average personal income relative to the rest of the U.S. contributes to its personal auto insurance affordability problems, which are exacerbated by its litigation environment.

About Insurance Information Institute
With more than 50 insurance company members — including regional, super-regional, national and global carriers — the Insurance Information Institute (Triple-I) is the #1 online source for insurance information in the U.S. The organization’s website, blog and social media channels offer a wealth of data-driven research studies, white papers, videos, articles, infographics and other resources solely dedicated to explaining insurance and enhancing knowledge.

Unlike other sources, Triple-I’s sole focus is creating and disseminating information to empower consumers. It neither lobbies nor sells insurance. Triple-I offers objective, fact-based information about insurance – information that is rooted in economic and actuarial soundness. Triple-I is affiliated with The Institutes.

About Insurance Research Council
The Insurance Research Council (IRC), affiliated with The Institutes, is an independent, nonprofit research organization supported by leading property and casualty insurance companies and associations. IRC provides timely and reliable research to all parties involved in public policy issues affecting insurance companies and their customers. IRC does not lobby or advocate legislative positions.

About The Institutes
The Institutes are a global not-for-profit comprising diverse affiliates that educate, elevate and connect people in the essential disciplines of risk management and insurance. Through products and services offered by The Institutes’ nearly 20 affiliated business units, people and organizations are empowered to help those in need with a focus on understanding, predicting and preventing losses to create a more resilient world.