BATON ROUGE, La. (WVUE) – A bill that would allow insurance companies to raise rates without the Louisiana insurance commissioner’s approval is halfway through the legislative process at the state capitol.

Rep. Mike Huval (R-Breaux Bridge) spoke in favor of his bill on the House floor.

“Prior approval has not resulted in reasonable insurance premiums,” Huval said. “Where there is not a healthy competition between insurance companies, the price goes up.”

But some of his House colleagues pushed back on the idea, including Rep. Mandie Landry (D-New Orleans).

“If the people in my district suddenly received a huge rate increase overnight, and heard that the department couldn’t do anything about it, I think it would make people in the state even more irate,” Landry said.

Insurance commissioner Jim Donelon also denounced the proposed deregulation.

“If we can’t regulate rates, then frankly that’s a vital part — an essential part — of making sure that insurance is affordable and available and fairly implemented across all policyholders,” Donelon said. “They would substitute the prior approval by the insurance commissioner with what’s called ‘use and file.’”

Huval says the insurance commissioner would still be able to challenge new rates.

“HB 489 will still allow the commissioner of insurance to disapprove filings that are unfairly discriminatory or violate Louisiana law,” he said.

Michael Barry, chief communications officer for the industry-funded Insurance Information Institute, said, “‘Use and file’ basically means that the new rate or the new rate structure takes effect immediately.

“You have two phrases in the insurance industry: “use and file” and “file and use.’ ‘Use and file’ states allow for insurers to get into a market very quickly, and to change their rates very quickly.”

According to the National Association of Insurance Commissioners, 17 states require prior approval for insurance rate changes. Others have flex rating/prior approval, and flex rating only.

Barry said in the insurance industry, flex “basically says if you’re the insurer and you’re either raising rates or decreasing rates 5 percent in a certain line of business, that could just take effect immediately, without any rate filing approval.”

According to a survey of average property insurance rates for all 50 states released earlier this month, insurance is more expensive in Louisiana ($3,095 per year) than in more populous New York ($2,573), Florida ($2,528) and California ($1,584). It is higher in neighboring Texas ($4,851) and Mississippi ($3,900).

“That doesn’t surprise me at all,” Barry said. “The cost of insurance, the price of insurance is based on the actual and anticipated losses in each state. And Louisiana, you look back to the 2020-21 hurricane seasons’ extraordinary damage.”

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