Know why car insurance rates might be skyrocketing? Blame it on your phone.

Car insurance rates in Louisiana have been on a significant upward trend, closely following a national pattern attributed to various factors like an increase in accidents and the rising costs of claims.

Why Are Rates Rising?

According to Insurance Commissioner Jim Donelon, "We’re seeing it play out all across the nation. The rise in car insurance rates is largely due to distracted driving and increased cellphone use while driving.

Over the past five years, car insurance rates in Louisiana have shifted dramatically. They were almost flat for a five-year period before that, with a modest 1% annual increase. However, since 2016, rates have been rising much more sharply. The most significant jump occurred in 2016 when rates increased by an average of 8%.

What's Happening Now?

State Farm is the largest insurer in Louisiana, with more than 1.1 million customers. In January 2023, they raised their rates by an average of 13.5%.

This followed an 8% increase the previous year. Other insurers followed suit: Progressive Security increased rates by 9.4% in late 2022, and Allstate raised its rates by 9.5%. Geico plans to increase rates by 16% this year.

These increases do not include the impact of catastrophic events, such as the flooding that destroys many vehicles. Deputy Insurance Commissioner Ileana Ledet says that auto insurance companies use past events to predict future losses. This could mean that rates may go up as companies get ready for possible future events.

The Impact on Insurers

The rise in accidents has significantly impacted insurers. Louisiana's auto insurers' claims costs rose from 67.4% of $2 billion in premiums in 2011 to 76.7% of $2.3 billion in 2015. For instance, State Farm lost $84 million on its auto business in 2015.

Robert Hunter works with insurance at the Consumer Federation of America. He stated that gas prices are lower and the economy is improving. As a result, more people are driving, leading to an increase in accidents. Claims costs, including medical care and auto repair, jumped 13% over the two years ending in March 2016, ten times the rate of inflation.

Newer cars, although equipped with advanced safety features, are more expensive to repair. Cameras, sensors, and other tech components add to the repair costs. Jerome Wiley, manager of Gordon & Sandifer Auto Service in Baton Rouge, said, "Cars nowadays have too many fancy features." I’ve seen side view mirrors cost a thousand dollars to replace."

The Role of Distracted Driving

Distracted driving is a significant contributor to the rise in accidents. Distractions cause a significant number of accidents.

They lead to 18% of injury crashes. Distractions are responsible for 15% of property damage accidents. They also contribute to about 10% of traffic deaths, according to the NHTSA. In Louisiana, distracted driving accounts for about 20% of fatal crashes.

Wiley said that using smartphones while driving causes over half of the accidents they witness. "People won’t admit it, but a lot of the wrecks we handle are due to distracted driving, usually involving their phones," he said.

State Farm spokesman Kip Diggs added, "Distracted driving, whatever the cause, has always been a concern. But with increased phone usage and enhanced vehicle technology, it's likely become a greater risk."

A Glimmer of Hope?

Despite the rising trend, there may be a silver lining. Allstate President Matthew Winter said in a recent call that rates have stopped increasing and are now stable at a new level. However, this new norm still includes more accidents, driven by an improving economy, more cars on the road, and the growing issue of distracted driving.

The rise in car insurance rates in Louisiana is a complex issue driven by a combination of more driving, more accidents, expensive car repairs, and distracted driving. While the increases have been steep, there is hope that the trend may stabilize, even if at a higher baseline than before. Car insurance rates will continue to be a concern for drivers in Louisiana. This is because of the ongoing risk of disasters and issues related to distracted driving.