A Louisiana lawmaker is aiming for the trucking insurance world. Critics warn that the move could upend the market and add new costs.
Rep. Edmond Jordan, D-Baton Rouge, is leading the charge. His bill, HB932, goes straight after captive insurance setups in trucking.
What is captive insurance?
Captive insurance companies don’t play by the same rules as traditional insurers. A business owner can set up their own insurance company – called a captive – to back up their regular coverage.
The owner pays premiums to the captive just like they would to any other insurance company. But the captive can write broader policies that cover losses standard commercial insurance won’t touch.
It also gives the owner more control over how claims are handled. The setup is touted as reducing the chances of being denied.
On top of that, the policies can be built to match the exact risks the business faces. It is not a one-size-fits-all plan.
Pressure builds on the system
The truck insurance bill is being pitched as a fix for what the sponsor calls a broken market – driven by adverse selection tied to captive insurance.
Jordan wrote in the bill that trucking insurance premiums in Louisiana have surged, with small and independent carriers getting hit the hardest.
Another concern: large national trucking companies are leaning more on captive insurance. The bill argues that this lets them exit the traditional insurance market and retain premium dollars in-house rather than purchase external coverage.
When those lower-risk companies leave, it puts pressure on the rest of the market. The result? Higher premiums for everyone left behind.
HB932 would force captive insurers to pay into a market access fund. Yearly payments would be based on how much premium they keep – a requirement critics say could drain resources from companies and drive up costs even more.
Critics warn of fallout
Opponents say the bill completely misses the mark on captive insurance and risk retention groups. They argue that these are legal, tightly regulated tools used by responsible trucking companies to manage risk properly.
They say slapping a penalty on retained premiums and trying to regulate these groups, no matter where they’re based, turns the bill into a targeted tax on alternative risk options.
They also warn that it could clash with federal law under the Liability Risk Retention Act.
Another red flag: critics say the bill could backfire. Instead, it could be even difficult to afford and harder to find for the very trucking companies the lawmaker says he wants to help.
What’s next?
The bill landed in the House Insurance Committee more than a month ago. It’s still sitting there, waiting for its turn. LL
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