Louisiana Department of Insurance
Volume 11, Issue 3
March 2011

Commissioner Jim Donelon
Theodore "Ted" Haik, Jr., Chair
Jeff Albright, Vice Chair

Raymond J. Aleman, Sr.
Lee Ann Alexander
Paul Buffone
Sheriff Greg Champagne
Representative Page Cortez
Manuel DePascual
Nick Gautreaux
Michael Guy
Chris Haik
Lance "Wes" Hataway
LTC John A. LeBlanc
Senator Eric LaFleur
Ann Metrailer
Robert Moorman
Senator Dan "Blade" Morrish
Carrie Pena
Stephen Schrempp
Earl Taylor

Terrell B. Moss, Director

David Evans,
Supervisor/Research Analyst

Katie Walsh, Administrative Assist./Research Analyst

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2010 Online Auto and Homeowners Rate Guides
Now Available

Commissioner of Insurance Jim Donelon announces that the 2010 online auto and homeowners rate comparison guides are now available for viewing.

“The rate guides provide premium quotes from top carriers of auto and homeowners insurance in our state,” said Donelon.  The automobile quotes reflect various rating situations such as driver and vehicle age, location and driving record. The homeowners quotes reflect rating situations such as location and the age and price of the home.  “It is important to remember that these rates are only for comparison purposes,” Donelon added. “The examples given may not precisely reflect your individual circumstances, and you may find that a company not listed in the guide can best offer the coverage and service you need.”

To access the guides, visit www.ldi.la.gov, click on Media located at the top of the home page,then click on Consumer Publications. The department can provide information on the national rating of each insurer and the number of complaints, if any, that have been filed against a company.

If you would like further guidance, contact the Department of Insurance at 1-800-259-5300.

Reforming the NFIP

The National Flood Insurance Program (NFIP) will expire on September 30 of this year.  A key House subcommittee is actively working on a draft of a bill that would extend the NFIP for five more years and reform the program.

The NFIP currently faces many substantial financial and managerial challenges.  Since 2005, the number of private insurers participating in the NFIP has decreased from 115 to 70.  The program is about $18 billion in debt to the Treasury Department, primarily due to hurricane flood losses in 2004 and 2005.  There were numerous lapses and extensions in the program last year, while lawmakers argued over reform, which created uncertainty, especially in the real estate market.

In an effort to move the program to sounder financial footing, the proposed Flood Insurance Reform Act of 2011 would move towards actuarially justified rates, study the feasibility of privatization, and build-in incentives to upgrade building codes.  The renewal program would also move to phase out most rate subsidies, tie coverage limits to the rate of inflation, and allow the program to sell optional additional living expenses and business interruption coverage.

Louisiana insured collected $15 billion in flood losses from hurricanes Katrina and Rita in 2005. While more Louisianans obtained flood coverage in the aftermath, that number has now fallen to pre-Katrina levels.

Usage Based Insurance Update

Pay-As-You-Drive auto insurance has been around since the 1990’s. This Usage Based Insurance (UBI) is a way for motorists to directly affect a reduction in their insurance premium. This month Progressive announced that it is expanding its latest UBI program – Snapshot – from the current 32 states to nationwide.

The Auto Ad Hoc Committee of the Louisiana Property and Casualty Insurance Commission is examining ways to reduce the high cost of auto insurance in the state and received a report on UBI at a recent meeting. Mr. Richard Hutchinson, Usage Based Insurance Business Leader at Progressive, gave a presentation on the past, present, and future of UBI, which included the Snapshot program. 

A small device plugged into a diagnostic port of the insured’s car records factors that Progressive monitors: mileage, the time of day (or night) driven most frequently, and the driver’s driving style (acceleration and braking). The program integrates driving data with traditional rating factors (claims history, vehicle make and model, financial stability and demographics) to determine if the driver is eligible to receive a personalized usage based discount of up to 30 percent. Mr. Hutchinson emphasized that Snapshot is not a location tracking or GPS device.

This program is available to consumers in Louisiana.

Trends in Auto Safety

Many consumers have recently become more economical due to rising gas prices.  Between the years of 2006-2008, data collected points to a trend in consumers purchasing larger, heavier SUV’s rather than smaller, lighter cars.  Since 2006, car manufacturers have added more fuel efficient and inexpensive vehicles to their fleet, and since that time, the popularity of lighter and medium weight vehicles has grown.  Today, the sale of lighter cars has grown, and the sale of medium weight vehicles has surpassed that of larger, heavier vehicles.  This information causes concern for some in regards to injuries sustained in automobile accidents.

Data collected from the Insurance Institute for Highway Safety (IIHS) proves that more deaths occur in lighter vehicles than heavier vehicles.  The data also indicates that more injuries are likely to occur when a lighter, more subcompact car collides with a larger, heavier vehicle.

Another cause for concern is the relative height of the crash impact. Automobile bumpers are meant to prevent damage in low-speed crashes.  However, regulations requiring all cars to have front and rear bumpers that protect a zone of 16 to 20 inches from the ground do not apply to sport-utility vehicles (SUV’s).  Because of this, bumpers on SUV’s fail to prevent damage to smaller cars in crash tests.

In 2008, the IIHS petitioned the National Highway Traffic Safety Administration to regulate bumpers on pickup trucks and SUV’s to be the same as cars.  Regulating the bumpers of SUV’s and trucks would help lower the high cost of damages in crashes with smaller cars.

Representatives from the Alliance of Automobile Manufacturers expressed concern in 2009 that the regulation would “significantly reduce the functionality and versatility of these vehicles.”  To date, no such regulation has been implemented.