An insurance trade group urged Louisiana Gov. Kathleen Blanco today to veto a measure that would raise the minimum requirement for motorists' auto liability insurance.
The Property Casualty Insurers Association of America is calling on Gov. Blanco to reject the bill, which secured final approval yesterday. The group argues against what it says is a "dramatic" increase in insurance limits that would increase auto insurance premiums for more than 40 percent of Louisiana drivers.
Senate Bill 233 increases the current minimum limits by two-and-a-half times– up to $25,000 for bodily injury liability to one person, $50,000 for bodily injury liability for two or more persons injured in any one accident, and $25,000 for property damage liability.
Greg La Cost, assistant vice president and regional manager for PCI, predicted that enactment of the bill would mean premiums "could go up 30-50 percent and that will be a heavy burden on consumers who are already facing high post-Katrina costs for food, gas, housing and other necessities."
Mr. La Cost said while the bill may be well intentioned, "the end result will not only be an increase in the cost of auto insurance, but quite possibly an increase in the number of uninsured drivers."
He noted that Louisiana already has the fourth highest auto insurance premiums in the country and predicted "this will only make insurance cost more than before."
PCI also complained that the increase in minimum limits acts to create larger targets for plaintiff's attorneys to go after.
With "deeper pockets" of coverage available, there is often added incentive to litigate–and the resulting larger settlements can also result in higher costs for all policyholders," PCI said.
It noted that during legislative debate over the measure, the insurance committee amended the bill to put fewer burdens on the consumer by increasing the limits slowly over time. That amendment was later removed, PCI said after "the trial bar put pressure on lawmakers."
The measure's sponsor, State Sen. Donald Cravins Jr., D-Opelousas, who is an attorney, did not immediately respond to a request for a reaction to the PCI criticism, and Gov. Blanco's office had no immediate answer when asked her stance on the bill.
Mr. La Cost said the increase in the bill is "too hard on consumers." Some lawmakers, he said, "sought a more pro-consumer compromise to phase in the increase, but the trial lawyers once again expressed their desire to have their money now."
PCI is composed of more than 1,000 member insurance companies that write over $194 billion in annual premium, 40.1 percent of the nation's property-casualty insurance.
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