Several business leaders are backing a bill—set to be heard Tuesday in committee—to reduce auto insurance rates in Louisiana, but the industry pushing the hardest is also one that could need it the most: agriculture.
Farmers, mill operators and agriculture leaders are rallying behind the effort to reduce rates, which House Bill 372 by Rep. Kirk Talbot aims to do, saying their industry is on the brink of an insurance crisis because there are so few carriers willing to insure agriculture businesses in Louisiana, driving rates sky high.
“There aren’t any affordable insurance premiums for commercial fleets,” says Charles Schudmak, chief operating officer of Cora Texas sugar mill in White Castle. “Premiums are going up because it’s harder to find carriers. Fewer and fewer will write policies for a sugar mill or agriculture business.”
Cora Texas uses a third-party company to operate a fleet of 128 trucks, which haul sugar cane to the mill during a three-month harvesting season each year. Although their 18-wheelers are used seasonally, Schudmak says, they pay the same rates as full-time trucks. On average, insuring one cane truck costs about $10,000, Schudmak says, though he’s heard of it getting as high as $30,000 per truck.
The main reason so few carriers will cover agriculture businesses, industry leaders say, is due to Louisiana’s litigious environment.
“These guys don’t want to write policies here because they’re scared of attorneys suing their pants off,” says Travis Medine, a farmer in Iberville and West Baton Rouge parishes. “And we (farmers) have a lot of exposure. We have a lot of vehicles and tractors, so we have to be extra careful with insurance.”
Talbot’s bill proposes a series of reforms aimed at lowering auto insurance rates, including reducing the jury trial threshold from $50,000 to $5,000, extending the period of time to file lawsuits from one to two years, providing for reduced damages for amounts paid by collateral sources and repealing direct action against the insurer.
The Louisiana Association of Business and Industry has called the legislation the “most important bill of this legislative session.” Critics, however, question whether the bill would actually lower rates and say it doesn’t address the other reasons driving up premiums.
But farmers looking for any relief possible from high auto insurance rates believe this is the bill to do that. The future of their business may depend on it.
“Farmers are running out of places to get coverage,” says Katie Sistrunk, manager of Ramagos Farms in Iberville Parish. “Frivolous lawsuits are driving us to not have as many options. Pretty soon the cost to insure our business will put us out of business.”