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June 4, 2009

Louisiana Legislature May Ban Cost-Saving Choice for Auto Insurance Companies and Consumers

Louisiana HB 208, which would effectively prevent auto insurance consumers from having the opportunity to purchase policies that allow them to limit coverage provided to permissive drivers (“step-down” coverage), is headed to the Senate floor.

This is our last chance to stop the bill. NAMIC is sending a letter this morning to all Louisiana state senators, but we need your help. Please contact your senator ASAP and ask him or her to vote “NO” on HB 208. A vote could take place as early as Monday, so time is of the essence.

HB 208 has been difficult to fight because it was drafted and is supported by the Department of Insurance (DOI). The DOI has made great strides in maintaining a balanced approach to insurance regulation – for the benefit of consumers and companies – and NAMIC has lauded the DOI for their efforts on many occasions.

However, if HB 208 passes, it would put a damper on consumer choice and a competitive auto market. It would detract from the sensible atmosphere the DOI has cultivated. Banning the use of “step-down” limits in auto insurance coverage would send a signal to companies that Louisiana is not an environment that values innovation and a diverse marketplace.

Some companies in Louisiana already provide “step-down” auto coverage. In a NAMIC-requested meeting with the House Insurance Committee chair and the bill’s sponsor, among others, earlier in the session, DOI representatives admitted that no consumer complaints involving “step-down” coverage have been reported.

NAMIC supports reformed state-based regulation and works diligently to encourage state efforts to modernize and develop consistent regulatory practices. Passage of HB 208 would play right into the hands of opponents of state-based regulation who regularly point out how “backward” state regulatory practices can be. Bills like HB 208 that limit consumer choice and companies’ freedom to underwrite and rate provide ammunition to those who would take insurance regulation away from the states and give it to the federal government.

Despite concerns regarding coastal property coverage, Louisiana is viewed by many as a state where a prudent, balanced approach to insurance regulation prevails. The Legislature, the DOI, and the industry have been able to work together for the benefit of consumers. HB 208 would divert us all from our common goal of a vibrant, diverse marketplace.

Please share this Member Alert with your employees and agents working in Louisiana and ask them to contact senators and ask them to vote “NO” on HB 208.

Direct questions to NAMIC State Affairs Manager Liz Reynolds.

Posted: Thursday, June 04, 2009 12:00:00 AM. Modified: Thursday, June 04, 2009 10:17:40 AM.

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