Prohibits an insurer from utilizing a rating factor in an automobile insurance rate filing

House Bill 413 amends Louisiana's property and casualty insurance rating standards by modifying R.S. 22:1454(B) to prohibit insurers from using certain catastrophe-based rating factors when filing automobile insurance rates. Specifically, the bill adds a new restriction that prevents insurers from including any rating factor in an automobile insurance rate filing that is based solely on loss experience resulting from a catastrophe or natural disaster that exclusively affected other lines of insurance. The bill simultaneously adds a new subsection authorizing the consideration of other relevant actuarial factors available at the time of rate filing, computed in accordance with accepted actuarial standards. The legislation carves out an exception for multi-line policies, which may still include such catastrophe-based rating factors without restriction. These amendments operate within the existing framework of R.S. 22:1454, which governs how the insurance commissioner evaluates whether rates are excessive, inadequate, or unfairly discriminatory.

Automobile insurance consumers will benefit from this legislation by preventing their rates from being increased based on catastrophic losses that occurred in unrelated lines of insurance such as property or casualty coverage. This restriction applies specifically to single-line automobile policies and prevents cross-subsidization of losses from other insurance products. Conversely, insurers may still incorporate catastrophe-based losses into rates for customers who purchase multi-line policies that combine automobile coverage with other insurance lines, allowing rate adjustments based on broader loss experience across the combined products. Insurance agents and brokers may experience increased complexity in explaining rate differences between single-line and multi-line automobile policies to consumers, since the rating methodologies will diverge based on policy structure.

This bill functions within Louisiana's existing insurance regulation system under Title 22 of the Louisiana Revised Statutes, which establishes the Insurance Commissioner's authority to regulate insurance rates in the state. The legislation does not eliminate the Commissioner's discretion to consider other relevant actuarial factors when reviewing rates for compliance with Louisiana's anti-discrimination and reasonableness standards. The effective date of January 1, 2027 provides insurers with a transition period to adjust their rating models and file revised rates that comply with the new prohibition. The carve-out for multi-line policies preserves insurers' ability to use integrated rating approaches for combined coverage products while restricting cross-line loss allocation only in single-line automobile filings.