The state of Louisiana has quite a conundrum on its hands. This conundrum involves insurance, taxes, and the survival of small business logging operations. This topic as been widely discussed as of late. It was a major topic at the 2019 Louisiana Forestry Association annual meeting and the LFA has an established Insurance Task Force. In spite of all the awareness and discussion, insurance costs and taxes continue to rise in the state of Louisiana.
A presentation by the LFA Insurance Task Force states that for log trucking in Louisiana, they are top 5 for insurance rates in the nation, truck insurance renewal increases range from 20-100%, costs of repairs continue to increase, and Louisiana has a very favorable climate for lawsuits involving heavy trucks. On May 23, 2019, the American Tort Reform Association (ATRA) released a report on trial lawyer advertising in Louisiana. ATRA president, Tiger Joyce, said “We know these ads may be irritating... but they absolutely have negative effects on consumers and businesses.”
They found that New Orleans saw more than 120,000 trial lawyer advertisements which cost nearly $7 million in the second half of 2018. Across New Orleans, Shreveport, and Baton Rouge, there were nearly one-quarter-million ads shown at a total cost of $15.6 million. Louisiana residents were found to be 60% more likely to file lawsuits following automotive accidents than the rest of the United States.
Louisiana is home to over 14.9 million acres of forestland, 90% of which is privately owned. According to a 2014 report, using data gathered from 2012, from the LSU Agricultural Center, the economic impact of Forestry and the Forest Products industry breaks down as follows:
· 1st Congressional District: 2,255 jobs and $108 million income
- $170 million value added to the district
· 2nd Congressional District: 1,617 jobs and $92 million income
- $333 million value output produced
· 3rd Congressional District: 2,754 jobs and $161 million income
- $503 million in output, $194 million in value added
· 4th Congressional District: 15,592 jobs and $892 million income
- $3.65 billion in output, $1.42 billion in value added
· 5th Congressional District: 18,245 jobs and $1.1 billion income
- $4.6 billion in output, $1.73 billion in value added
· 6th Congressional District: 5,198 jobs and $320 million income
- $1.4 billion in output, and $570 million in value added
· Total Federal Tax impacts: $456,932,347
· Total State and Local Government Tax Impacts: $254,330,922
Forestry is vitally important to the state and local economies of Louisiana, but forestry industries don’t run without loggers. A log truck fully loaded cannot exceed 88,000 lbs on non-interstate highways or 83,400 lbs on interstate highways, which is equivalent to approximately 38.7 tons of wood. Imagine a major collision with that much weight. If you can imagine the amount of damage, IF you were to survive that kind of collision, you can understand the compensation that you would want or need.
Fortunately, that kind of accident isn’t as common as injury lawyers would like for everyone to believe. Unfortunately, they and the lawsuits that follow are common enough that insurance companies all demand their piece of the pie. In Louisiana, the average cost of commercial truck insurance is $13,143. The bulk of premiums range from $11,200 to $16,308 per truck. Most logging operations require two to three trucks at minimum in addition to expensive logging equipment. The operations that can are moving or downsizing slightly. The operations that can’t are struggling or going out of business entirely.
A state in which rural areas rely so heavily on forest industries can only go on so long with fewer and fewer loggers. These topics are becoming more commonly discussed as time passes. The LFA Insurance Task Force, Loggers Association, and some lawmakers have been trying to introduce bills to the state legislature to address some of these issues, but they have difficulty making progress when most of the congress is composed of lawyers who benefit from injury lawsuits and high insurance rates. These issues will not be solved overnight, but a broad understanding of the impacts of the forest products industry may help lawmakers to appreciate the importance of the industry.
For more information on these topics, you can check out the links below: