Louisiana Least Affordable for Auto Insurance
number one on a list of least affordable states for auto
insurance, according to a new study from the Insurance Research Council
(IRC). One factor behind the high cost of insurance in Louisiana is the
frequency of auto accidents and resulting insurance claims, the IRC said.
In 2017, Louisiana had the highest bodily injury (BI) liability claim frequency
in the country (1.75 claims per 100 insured vehicles, almost double the
countrywide rate of 0.90 claims per 100 insured vehicles).
Another factor cited by the IRC is frequent claims and litigation, "the
propensity of Louisiana claimants to hire attorneys and file lawsuits." Among
2017 BI claims, 54% of Louisiana claimants hired attorneys, compared with 48%
of claimants in other states. Moreover, Louisiana claimants were 60% more likely
to file lawsuits (16% compared with 10% countrywide), the IRC said.
In the last legislative session, a bill was passed to create the High Auto
Insurance Task Force, which PIA's Immediate Past President Lou Fey sits on this
task force as the PIA of Louisiana representative. This task force, chaired by
House Insurance Committee Chairman Kirk Talbot has met a few times since forming
with the goal of introducing legislation in the 2019 Legislative Session to
address this issue. We'll keep you updated as work evolves.
Private Equity Deals and Instability
Private equity deal makers are pushing buyout values to levels not seen
since 2007, as they ride a wave of cheap debt, according to a report in the
Financial Times. Although the deals may not be as large in the last buyout
bubble, today's deals are again fueled by supersized portions of cheap debt,
with few strings attached. In about half of this year's deals, private equity
firms were able to raise debt financing up to at least six times the annual
earnings before interest, tax, depreciation, and amortization of the company
This is starting to raise alarm bells. Janet Yellen, the former chair
of the U.S. Federal Reserve, told the Financial Times last month that
she was worried by a "huge deterioration" in corporate
lending standards, particularly for leveraged loans. The International
Monetary Fund (IMF) has also singled out leveraged loans as a potential source
of financial instability.