Auto insurance reform legislation vetoed in Louisiana

Louisiana Gov. Jeff Landry announced he will veto insurance reform legislation that aimed to revise the state’s collateral source doctrine.

This tort law principle ensures policyholders are compensated by the liable party for damages, regardless of any third-party payments, such as an insurance settlement.

According to a report by AM Best, current Louisiana law allows a plaintiff to receive 40% of the difference between the amount billed and the actual amount paid to a medical provider.

The proposed legislation sought to lower this threshold to 30% and exclude any medical payments made as part of an automobile insurance policy. The bill passed the state House by a vote of 88-10 and the state Senate by a vote of 25-14.

During a June 18 press conference, Landry commented on the widespread misunderstanding of the state’s collateral source laws among critics.

“What is absolutely entertaining as I read the articles, listen to the radio, and field texts from my dear friends, not one of those critics or one of my friends texting me can explain to you, or me, what the collateral source doctrine is,” Landry said.

“In fact, those watching are probably scratching their heads, but they’ve heard that if we eliminate it, it will be the panacea to our high insurance premiums.”

Following Landry’s veto announcement, Louisiana Commissioner of Insurance Timothy J. Temple called for a special legislative session to address the state’s rising auto insurance costs.

“Louisianans have suffered from ridiculously expensive auto insurance premiums for far too long. We all have friends in states like Texas and Mississippi who save money while we pay twice as much to insure our family vehicles. Louisiana businesses, especially those near our borders, are setting up shop in other states to avoid our extreme rates,” Temple said.

Despite Landry’s veto of this particular insurance reform bill, the governor has signed several other insurance-related bills into law. These include changes to non-renewal rules, establishing timelines for claims handling, and updating rate and form filing approvals.

Clyde Bohne, chair of the government affairs committee for Professional Insurance Agents of Louisiana and principal at Preferred Insurance Agency of Louisiana, expressed optimism about the future.

“While we are disappointed with the veto of H.B. 423, we are optimistic that the insurance bills that were passed into law from this legislative session will create new opportunities for new insurers to enter the insurance marketplace in Louisiana,” Bohne said.

“Our commissioner, the staff at the department of insurance, our legislators and governor have created the beginning of an insurance ‘renaissance’ in Louisiana. Insurance availability will equal insurance affordability for Louisiana citizens.”

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