State Farm to Lower Auto Insurance Rates in Louisiana

Beginning in April, Louisiana customers of State Farm Mutual Automobile Insurance Co. will see a decrease in their auto insurance rates, the insurance department announced.

The department reported that Insurance Commissioner Jim Donelon approved the third rate decrease filed by the company over the past nine months.

With the rate drop set to go into effect in April, more than one million policyholders in Louisiana will see a decrease of 3.2 percent. The two previous State Farm rate decreases that took effect within the past year are a 2.7 percent decrease for State Farm coverage on private passenger vehicles, effective in July 2018, and a 1.8 percent decrease that was effective in September 2018.

Taken together, the total impact of State Farm’s recent rate changes is -7.7 percent, the department said.

“These decreases are directly attributable to competition in the auto insurance marketplace and again demonstrates that competition is truly the best protection for policyholders,” Donelon said in a departmental media release. He added that State Farm’s actions “will pressure other insurers to take similar steps.”

Louisiana has some of the high auto insurance rates in the U.S. Donelon has previously attributed rising rates in the state to more crashes and insurance claims, the greater expense of repairing vehicles that have newer, sophisticated technology, as well as high litigation rates related to auto accidents.

Louisiana’s rates are the highest among the South Central states. According to data from the National Association of Insurance Commissioners (NAIC), Louisiana in 2016 (the most recent year for which NAIC data is available) had an overall average auto insurance rate of $1,302, compared with $1,009 in Texas, $851 in Oklahoma and $772 in Arkansas. The national average expenditure per insured vehicle in 2016 was $936.

The average auto insurance rate has risen since then, according to the 2017-2018 Annual Report for the Louisiana Property and Casualty Insurance Commission (LPCIC). That report shows the average auto premium per vehicle in Louisiana had risen to $1,921, and that the New Orleans and Baton Rouge areas have the highest auto rates in the state.

In August 2018, Donelon formed the Louisiana High Auto Rates Task Force, with the aim of investigating the state’s auto insurance market and making recommendations to the Legislature for actions to lower rates.