Guest Column: Let History Repeat Itself To Fix Auto Insurance In Louisiana

Successful reforms targeting medical malpractice in 1975 and workers' compensation in 1991 solved Louisiana's insurance crises of those times. Putting the current auto liability crisis into that historical context may help provide a path for the present.

In 1975, Louisiana enacted medical malpractice reform legislation aimed at addressing the escalating costs and diminishing availability of medical malpractice insurance. The legislation introduced a cap on noneconomic damage and limited awards for pain and suffering to $500,000, while allowing unlimited economic damages.

This reform was designed to stabilize the medical malpractice insurance market, reduce the burden on health care providers and ensure that patients still had access to necessary medical services. At the same time, legislators created an underwriting entity, the Patients' Compensation Fund (PCF), to spur the market. Today, this insurance market is stable, competitive and healthy.

In 1991, Louisiana passed comprehensive workers' compensation reform legislation aimed at addressing the rising costs and inefficiencies within the system and a disappearing insurance market. The reforms included changes to the benefit structure, such as limiting the duration of temporary total disability benefits and establishing a more streamlined process for resolving disputes.

This took adjustment of claims out of the open courts and into a stable adjudication process. Litigation was curtailed significantly and workers' claims were resolved quickly. At the same time, legislators created an underwriting entity, the Louisiana Workers' Compensation Corporation (LWCC) to spur the market. Today, this market is also stable, competitive and healthy.

Under legislative mandate, the PCF and LWCC began writing insurance and both succeeded quickly in the improved environments established by the corresponding legal reforms. Both sponsored by the state, neither has created a financial burden on the state.

The success of the LWCC is particularly notable. It attracted dozens of insurance companies to Louisiana, creating an enduring, competitive market for workers' compensation insurance. The LWCC model has been so successful, the entity has returned hundreds of millions of dollars to policyholders over the years.

A key element of past legislation was easing of rate regulation. This allowed these state-sponsored underwriting entities to lead the commercial markets to lower rates to compete for business in an improved environment.

By contrast, one piece of legislation in 2025 gave the Department of Insurance the authority to demand lower rates without the reforms and structural changes used to solve the prior insurance crises. This will not work.

But, following a successful playbook from the past, our legislators can pass legislation in 2026 to, first, establish a cap on noneconomic damages. Similar to the medical malpractice reforms, implementing a cap on noneconomic damages in automobile liability cases will help stabilize insurance premiums by reducing the potential for unnecessarily large jury awards.

Second, they should streamline claims processing by implementing a mandatory adjudication process for auto liability claims outside the traditional court system, like the process in Louisiana's workers' compensation system, to improve the overall experience for policyholders and claimants.

Third, they should create an underwriting entity, like a PCF or an LWCC, to spur the market in a better environment established by the first two reforms.

By adopting legal reforms and sponsoring an underwriting entity, Louisiana legislators can fix auto liability in Louisiana, just like they fixed medical malpractice liability and workers' compensation in the past.

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