LOUISIANA STILL LEAST AFFORDABLE STATE FOR PERSONAL AUTO, HOMEOWNERS INSURANCE

Either way, finding ways to address this through regulatory or industry reforms or some other method could help alleviate some of the strain on Louisiana’s residents.

Louisianans also spend far more on homeowners coverage than the national average, paying out an average of $1,965 annually. Among the highest in the nation, these premiums equate to 3.84 percent of the median household income in the state – 55 percent higher than the national average.

“The state has had a lot of major weather events, and each catastrophe event was followed by extensive litigation,” the report finds. “Rising auto-repair and construction costs, combined with the state’s low relative household income, have further intensified these problems.”

Cost drivers for personal auto include:

The property damage liability claim frequency per 100 insured vehicles in Louisiana is 16 percent higher than it is nationwide.

Injury claim relative frequency: The willingness of Louisianans to file an injury claim if an accide_t occurs is higher, with a relative claim frequency almost twice the national average.

Medical utilization: Auto claimants in Louisiana are more likely to be treated with diagnostic procedures, like magnetic resonance imaging, or MRI, than claimants elsewhere.

Attorney involvement: On average, claimants in Louisiana are far more likely to hire an attorney compared with claimants in other states. Attorney involvement is correlated with higher claim costs and longer settlement times.

Claim litigation: On average, personal auto claims in Louisiana are more than twice as likely to be litigated compared with the country as a whole. The state’s litigation rate is the second highest in the country—exceeded only by Florida’s rate.

Homeowners cost drivers include

Claim frequency, catastrophe claims: The frequency for the number of catastrophe claims paid for every 100 homes insured for the entire year in Louisiana is nearly six times more than the national average.

Claim severity, catastrophe claims: Working-class Louisianians who live in a hurricane-prone region have been paying second only to Floridians for the average amount paid on a homeowners claim. Louisiana was 12 percent higher than the national average.

Natural hazard risk — weather: Under existing conditions, Louisiana’s exposure to building damage from weather hazards ranks second only to Florida’s and far exceeds other states.

Claim litigation: For claims in Louisiana than compared with states other than Florida, claims were 12 times more likely to involve litigation.

The issues that best describe the Louisiana insurance market, no doubt, are very grave. Major insurance providers are turning their backs on the state, and carrier insolvency has opened up immense coverage gaps that exact financial pressure on citizens and businesses alike.

This last resort of dependence on the state-run insurer, Louisiana Citizens Property Insurance Corporation, underlines how grim the situation really is. Although this creates a safety net, its high costs make it unaffordable for most residents, especially to the most vulnerable among them.

Such insurance challenges do not stop at financial burdens; the ripple effects are felt in decreased population for Louisiana as more people have to seek cheaper alternatives elsewhere, which in turn brings out the general socio-economic impact of the case.