Tort reform season

In Louisiana, we have many seasons. I’m not talking about winter, spring, summer, and fall. I’m talking about hunting season — deer, quail, rabbit, squirrel, raccoon, opossum, nutria, beaver, turkey, duck, and dove. And from mid-April to mid-June, we have the 2025 legislative session. For us, it will be tort reform season. 

Each year, groups like the Louisiana Association of Business and Industry, the national chamber of commerce, and the recently elected commissioner of insurance go hunting to try to reduce and/or eliminate the rights of Louisiana citizens when they or their property is damaged through no fault of their own. 

To help us navigate tort reform season, I am providing some guidance on how to educate friends, family, clients, and legislators about the misguided attempts to limit your clients’ rights. The American Association for Justice compiled this information using publicly available data.

2023 was the insurance industry’s most profitable year in history. After costs and taxes, the industry made almost $88 billion.1 In the first three quarters of 2024, the industry shattered that record.2  These profits came on the backs of huge rate increases of 19% since 2022, totaling nearly $1 trillion.3

Additionally, insurance company stocks are out-performing the market considerably. The property and casualty sector out-performed the S&P 500 by nearly double in 2024.4 The property and casualty insurance industry has also raised auto insurance rates dramatically. From 2023 to 2024, we saw the largest increase in auto insurance rates in 45 years. These rate increases caused 0.6% of the overall inflation of 3.8% in the last year.5  

Insurers also raised rates on homeowners and commercial lines.6 The most profitable insurance group, Berkshire Hathaway, made more money than Nvidia.7 Nvidia’s incredible rise has made it the largest company in the world by market capitalization, yet Berkshire Hathaway is far more profitable. The insurance group owns 60 insurance companies, including GEICO, but its commercial insurer, National Indemnity Co., made the bulk of its profits.

Most corporations incur costs before revenue. Insurance companies are unique because they receive revenue upfront and can invest the revenue before paying costs. These insurance companies use premiums paid — or “float” — as a war chest to make other investments.  

Berkshire Hathaway CEO Warren Buffett stated, “This collect-now, pay-later model leaves property and casualty companies holding large sums — money we call ‘float’ — that will eventually go to others. Meanwhile, insurers get to invest this float for their own benefit.”8

Insurers and the commissioner come to the Capitol to explain that they are not really making money in Louisiana because we have more claims and spend more money on those claims than other states. 

The loss ratio numbers produced by the National Association of Insurance Commissioners say differently, especially in personal auto. The data in NAIC reports comes from information that insurance companies report.  In spite of this, the commissioner is once again proposing changes that will enrich insurance companies without evidence that any of this will reduce rates. Our experience after decades of tort reform tells us it will not bring relief to policyholders.

I encourage you all to do as much as possible to educate yourselves, your friends, colleagues, clients, and lawmakers about these issues. The tort reform season will be upon us next month. While it is too early to predict what bills will be filed, we can certainly expect some of the following:

• Elimination of the Housley presumption
• Modified comparative fault
• Soft-tissue damage cap
• Reversionary trust for future medical bills
• Medical transparency bill to allow the admissibility of the actual amount paid versus the actual amount billed
• Pre-suit notice requirements

Please attend LAJ Regional Membership Luncheons leading up to and throughout the session. Those meetings will provide unparalleled access to information that cannot easily be disseminated otherwise. Stay informed and reach out to your senators and representatives to tell them about the effect of their bills or votes on their constituents. We need all hands on deck to protect access for all citizens to the civil justice system and to ensure a fair recovery based on any damage sustained due to the fault of others.  

Endnotes

1. “U.S. Property & Casualty and Title Insurance Industries — 2023 Full Year Results.” NAIC.
2. “First Look: Nine-Month 2024 US Property/Casualty Financial Results,” AM Best. December 4, 2024.
3. “Special Report: First Look: Six-Month 2024 US Property/Casualty Financial Results.” AM Best. September 16, 2024. 
4. “Insurance — Property & Casualty.” Yahoo Finance. 
5. Baker, Dean. “Inflation and Auto Insurance.” Center for Economic and Policy Research. 2024.
6. Sheets, Cassie. “Report: Home Insurance Rates to Rise 6% in 2024 After 20% Increase in Last Two Years.” Insurify. 2024.
7. Berkshire Hathaway Ins. Grp. Results from AM Best Aggregates and Averages. Nvidia (trailing 12 months from January 31, 2024) from YCharts.
8. Buffett, Warren. Letter to shareholders. Berkshire Hathaway. 2023.