Louisiana is least affordable state for auto insurance, IRC asserts
Frequent claims and litigation are factors behind the high cost of auto insurance in Louisiana.
Louisiana ranks number one on a list of least affordable states for auto insurance, according to a new study from the Insurance Research Council (IRC).
In a statement, the IRC said that reasons for the state’s high insurance rates include the frequency of auto accidents and resulting injury claims, “as well as the prevalence of attorney involvement and litigation.”
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According to the IRC, a division of The Institutes, Louisiana’s affordability index (2.64%) was the highest in the U.S. from 2011 to 2015. The affordability index is the ratio of average expenditures on auto insurance to median household income.
Highest bodily injury liability claim frequency
One factor behind the high cost of insurance in Louisiana is the frequency of auto accidents and resulting insurance claims, the IRC said. In 2017, Louisiana had the highest bodily injury (BI) liability claim frequency in the country (1.75 claims per 100 insured vehicles, almost double the countrywide rate of 0.90 claims per 100 insured vehicles).
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In the IRC’s opinion, another important factor “is the propensity of Louisiana claimants to hire attorneys and file lawsuits.” Among 2017 BI claims, 54% of Louisiana claimants hired attorneys, compared with 48% of claimants in other states. Moreover, Louisiana claimants were 60% more likely to file lawsuits (16% compared with 10% countrywide), the IRC said.
Factors driving affordability of auto insurance
“The affordability of auto insurance is an important issue in Louisiana and many other states,” said Elizabeth Sprinkel, CPCU, senior vice president of the IRC. “As policymakers seek to address this issue, it is vital to have an understanding of the cost drivers that underlie variations in the cost of auto insurance for consumers.”
The report, “Auto Insurance Affordability: Cost Drivers in Louisiana,” combines information from IRC closed-claim research and other sources and is part of IRC’s ongoing research into the factors driving the affordability of auto insurance.
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Steven A. Meyerowitz, Esq., (smeyerowitz@meyerowitzcommunications.com) is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc.