La. Auto Rates Rising
Citing increasing medical and repair costs, a weak stock market, and the effects of state laws enacted in 1998, Louisiana insurance regulators anticipate a rise in auto rates in their state. The Times-Picayune reports that State Farm, which writes some 35 percent of auto policies in Louisiana, requested a rate hike of between 16 and 21 percent; other carriers are expected to make similar requests. State Farm reported more than $450 million in losses for 2000 and 2001, as well as $41 million through April 2002; the company hopes to recoup some of these losses through $151 million in rate increases—16 percent for customers covered by State Farm Mutual and 20.9 percent for those covered by State Farm Fire and Casualty. Such increases would add an average of $144 a year to standard and $232 for high-risk policyholders. According to Acting Insurance Commissioner J. Robert Wooley, auto rates had been kept artificially low for six years, and that the LIRC has shown trepidation when it comes to raising them again. Two state laws that went into effect in 1998—a “no-pay, no-play” law that excludes the first $10,000 of claims from being paid to uninsured drivers in accidents and another that authorizes police to seize license plates of drivers without proof of auto liability insurance—have proven effective, according to Wooley. The no-pay, no-play law has reportedly reduced auto rates in Louisiana by $120 million since it took effect.
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