Sunday, July 21, 2024

Louisiana House rejects proposal to regulate how auto insurance companies determine rates

by BIZ Magazine

By David Jacobs | The Center Square

A bill that would have banned auto insurance companies from using several factors other than driving ability to set rates was voted down by the Louisiana House.

Under House Bill 467, companies would have been barred from using a driver’s credit information, education level, home ownership, employment, trade, business, occupation or profession. A similar bill focused on gender, credit score and the driver’s status as a widow or widower was killed in a Senate committee.

The bill’s Republican critics argued the companies should be able to use any factors they want to set rates without government interference.

“Those factors aren’t arbitrary,” said Rep. Alan Seabaugh, a Shreveport Republican. “Let the market set the rates.”

Rep. Edmond Jordan, the Baton Rouge Democrat who authored the bill, however, pointed out that auto insurance is not sold in a free market because the government requires drivers to buy it. So in this case, he argued, government has a responsibility to make sure those consumers are treated fairly.

HB 467 would have applied to only personal auto insurance, not commercial policies.

Jordan said his bill would allow the 75% of Louisiana residents who don’t have a college degree to save money. He conceded the other 25% might end up paying more but said that wasn’t a certainty. If lower-income people currently driving without insurance can afford to pay for it, that would bring more people into the mix, lowering the overall risk and possibly leading to lower average rates, he suggested.

“In a true free market economy, use any factor you want,” Jordan said, paraphrasing a witness who supported his bill in committee. “It is compulsory. Because the state’s mandating it, we have a responsibility to do that in a fair and neutral way.”

Republican Sherman Mack of Albany supported the bill in committee and on the House floor, which he said was out of character for him. He said his 19-year-old self, who was a pretty good driver but was struggling financially and paying more for auto insurance than for his vehicle note, would want him to support the bill.

The bill failed Tuesday on a 37-51 vote.

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