Insurance Run-Offs Newsletter

Wednesday, December 1, 2004

London, England

Never one to criticize law enforcement, the case of former Louisiana Commissioner of Insurance Jim Brown leaves many unanswered questions, but the publication of new book might well shed some new light on this tale. The cheap and easy shot for a journalist (accurate I can hear one or two of my colleagues saying) is to depict "Insurance and Louisiana" as a troubled zone. Three consecutive State Insurance Commissioners found themselves in prison; Sherman Bernard, Doug Green (the man who fought the election ticket on the slogan, as I recall, "Doug Green, Mr. Clean") and most recently Jim Brown.

It is generally accepted that the regulation of insurance in Louisiana (and several other States) left much to be desired in the 1980s and there was much talk of how easy it was to get a license to underwrite insurance.

Jim Brown however, who swept to power after the demise of Doug Green, was a crusader for justice, he closed down dozens of insurance companies (you can make enemies doing that), reducing the number locally domiciled from around 65 to 15, give or take.

Brown was a successful advocate for justice and unlike many "insurance regulators" did understand the intricacies of the "real" insurance world. Brown was most influential in being the lead US regulator in negotiating the future of Lloyd's in the United States at the point of "reconstruction and renewal" at the venerable insurance market. As an aside, I read a recent news report which quoted a former senior insurance regulator who postulated, "The end of Lloyd's would have left 300 insolvent insurance companies in the US, 51 in New York state alone."

It was therefore something of a shock when it Jim Brown was arrested and a federal jury convicted him in October 2000 for lying to an FBI agent about the liquidation of a failed insurance company. Brown completed his prison sentence in April 2003 and is on probation until 2005. It should be noted that the same Court acquitted Brown on 43 charges of fraud, conspiracy and witness tampering in the case. Brown made it plain that he was not able to contest all the charges and he couldn't properly defend himself against the false statement charges because he was unable to see the FBI agent's handwritten notes.

The National Association of Insurance Commissioners (NAIC) travel to New Orleans this weekend for their quarterly meeting, which is bound to be a super-charged affair post-Spitzer!