Insurance Commissioner Tim Temple joins the show to emphasize the importance of being weather-wise due to potential flash flooding. He then explained the factors that determine car insurance rates, highlighting that premiums are based on predicted losses. Insurance companies calculate premiums by considering loss history and the physical risk of the insured asset, whether it’s a car or a home. Temple noted that premiums follow losses, meaning if an insurance company incurs higher losses than expected, they will need to increase premiums to stay in business and pay future claims.
Temple also addressed the misconception that insurance companies are making excessive profits in Louisiana. He clarified that insurance companies must justify their rates to the Department of Insurance using actuarial science. If the rates are deemed excessive or inadequate, they are not approved. He mentioned that he has disallowed rates 39 times for not adding up and deemed 21 rates as excessive during his tenure.
The discussion also touched on the legislative efforts to address high insurance rates. Temple mentioned several bills aimed at reducing premiums by addressing the underlying causes of high losses. These include bills on medical transparency, modified comparative fault, and no pay, no play policies. He emphasized that a comprehensive approach involving multiple bills is necessary to achieve meaningful reform.
Temple also highlighted the importance of insurance companies making a profit to ensure they can pay claims and remain in business. He proposed the idea of creating a Louisiana-based insurance company to address the state’s unique challenges, although he acknowledged it might not be a feasible solution.
Overall, the conversation underscored the complexity of the insurance industry and the legislative efforts needed to address high insurance rates in Louisiana.