The Task Force for Affordable Automobile Insurance Rates met for the second time late last year and voted to not make recommendations to the House and Senate insurance committees as was mandated in the resolution by Sen. Katrina Jackson creating the task force. The task force held its first meeting on Sept. 29, 2020.
The motion to hold off making recommendations to lawmakers was made by Sen. Kirk Talbot, R-River Ridge, who co-chairs the panel and is chairman of the Senate Committee on Insurance. Talbot’s motion was seconded by Robert Kleinpeter, who is with the Louisiana Association for Justice. There were no objections to the motion Talbot made. He said plans for successive meetings after the first meeting in 2020 had been “scuttled” because of Covid-19.
At its recent meeting, the panel replowed some of the ground it covered in its first meeting and hit upon a few new concepts.
The committee first heard a presentation by the Louisiana Department of Insurance. After looking at what other states departments of insurance do relative to fraud, Matthew Stewart, deputy commissioner of LDI’s Division of Insurance Fraud, said, for the most part “there is no difference” between Louisiana and states that surround Louisiana.
Stewart explained that the Louisiana Legislature added staged accidents to Title 14 (Louisiana’s Criminal Statute) during its last session. The new law, RS 14:68.4.1 and 2, makes staging of a motor vehicle collision and aggravated staging of a motor vehicle collision criminal acts.
According to Stewart, the new law removes the requirement for a claim to be filed (before a crime is committed); Therefore law enforcement can charge the perpetrator of a staged accident on the scene if the evidence indicates the accident was staged.
Unlike Louisiana, Stewart said, in Arkansas, the department of insurance has arrest authority, and in Texas, TDI has investigators and prosecutors in house.
He said LDI is trying to “get more things out of our code,” Title 22, the Insurance Code, and into other sections of the Revised Statutes.
Michael Wilkerson, Louisiana State Police Insurance Fraud and Auto Theft Unit, explained that Louisiana differs from some other states in that in Louisiana all insurance fraud is a felony, so when a district attorney agrees to a misdemeanor plea, the crime is recorded as something other than insurance fraud. Other jurisdictions have various levels of insurance fraud. “It may help to be able to drop charges to a misdemeanor.” Other states have Class A or Class B misdemeanors relative to insurance fraud, he said.
Wilkerson said that his unit gets most of its referrals from the Department of Insurance, but people also call in. The Insurance Fraud and Auto Theft Task Force is composed of the Attorney General, State Police and the Department of Insurance.
The district attorneys have to request from the Attorney General or recuse themselves. Wilkerson believes the Attorney General is more familiar with the insurance fraud statutes than most parishes’ district attorneys.
Sen. Katrina Jackson, D-Monroe, was amenable to looking into legislation that would create a misdemeanor charge.
John Ford, the former director of the Louisiana Theft and Insurance Fraud Prevention Authority, told the panel that it is part of the LATIFPA’s mission to do public awareness. Television commercials ran in New Orleans, Baton Rouge and Shreveport, along with radio spots statewide.
In addition, LATIFPA goes to high schools and councils on aging to make in-person presentations.
Stewart said the LATIFPA gets $187,000 a year for public awareness and license plate readers.
In a recent year, according to Ford, LATIFPA placed five license plate readers at a cost of $30,000 each, which accounts for $150,000 of the $187,000. LATIFPA has eight pending requests for license plate readers.
It is only recently that LATIFPA has had more requests for readers than it could fund. Ford said LATIFA looks at the number of potential reads the readers are likely to get when deciding where to place readers, with those expected to get the most reads being first in line for a reader.
Jackson pushed for the license plate readers to be placed in more rural areas where enforcement dollars are less.
Talbot opined that the $187,000 budget seems low.
Stewart said that 90 percent of fraud reported to LDI comes from insurance companies. Whereupon, Jackson wanted to know how the department looks into company fraud.
Stewart explained that LDI does financial examinations every five years and does market conduct reviews more often if there are a lot of consumer complaints.
During Commissioner of Insurance Jim Donelon’s remarks, Jackson asked him how many companies write auto business in Louisiana. He explained that how many are writing is “not particularly relevant to what we are doing here.” He said that commercial auto is a loss leader, but companies do make money on private passenger auto business.
Talbot reminded the members that State Farm has 15 percent of its policies in Louisiana and 52 percent of the company’s bodily injury claims.
Auto rates were going down. They were tracking automobile fatalities down, but that trend reversed with distracted driving. Highway deaths were up seven percent in 2021 over the previous year.
Only Florida and California commissioners have the authority to mandate rate decreases. State Farm lowered rates nine percent voluntarily during the pandemic. The rate decrease amounted to $200 million to policyholders. Whether that was adequate Donelon could not say, but State Farm clawed back 4.6 percent with a rate increase.
Companies did make rebates available during the pandemic. Whether it was adequate, Donelon said he does not know.
Jackson brought up considering an infrastructure approach to bringing down automobile rates. “We haven’t addressed whatever effect mass transit would have on reducing accidents,” she said. She opined that a train from New Orleans to Baton Rouge “would get drivers off the road.”
Kleinpeter remarked that over decades of tort reform he has not seen rates decrease. “We have been doing tort reform for 40 years, and it hasn’t moved the needle,” he said.