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Monday, October 3rd, 2022
Baton Rouge, Louisiana
WHAT TO DO ABOUT HOMEOWNER’S INSURANCE?
Well, what do you know. We finally have a governor in Louisiana who is showing an interest in the property insurance crisis that is sweeping the state. One of the problems here in the Bayou State is that the governor has no responsibility or oversight dealing with insurance issues. And that’s not the case in the majority of states around the country.
In other states were there have been major insurance reforms, there is no elected insurance commissioner. The governor appoints the commissioner which means the actual responsibility falls directly on the state’s chief executive. Only 11 states elect their insurance commissioner, including just a few in the south. That means the governor has to roll up his or her sleeves and get involved when there are major crises. And it’s hard to imagine things getting any worse than they are right now in Louisiana when it comes to property insurance and auto insurance.
Louisiana governor John bel Edwards is in England this week meeting with Lloyds of London, the world’s largest insurance group. I know something about Lloyd’s, since Louisiana, back in the 90s, was the first state in America to financially examine this London-based company when I was head of the insurance department. Actually, Lloyd’s is a series of groups known as syndicates. My staff determined that Lloyd’s could well be going broke, and we instituted some strong fiscal changes that protected both US investors as well as states like Louisiana where Lloyds was selling insurance.
The Governor is not going to get much help for Louisiana policyholders by talking to Lloyds. They are in the business of making money, and their advice is going be simple. Just keep raising insurance rates. And bailouts to insurance companies in need. Big help for the average Joe down here in the Bayou state, right?
Let’s get one thing straight that we can all agree on, and makes it worth talking about. Property insurance is a necessary evil, and every property owner has to have it. And nobody’s happy over the present way the system works.
Here’s what the Governor should be doing. Call the governors in surrounding gulf coast states that have similar problems with property insurance rates. Propose a joint effort to governors in Texas, Mississippi, Florida, Alabama, Georgia and the Carolinas. All these states face huge mounting claims. The damage used to be severe in deep southern states. But last week’s disaster called hurricane Ian has shown that the whole East Coast faces vulnerabilities.
Here’s with the governor should suggest. Try to get agreement from states along the coast to create a new multistate insurance pool that would add a new assessment on every property insurance policy sold. The money would go into a multistate rainy-day fund for use when a major hurricane hit. Several formulas might be used, but the idea would be to limit how much any one insurance company would have to pay out. In return, property insurance rates would be less. Significantly less.
Louisiana is too small an insurance market to go with such a plan alone. But if at least six or seven states would all join in, it would make good common insurance sense for such a plan to be offered to policyholders along the gulf coast. And the bottom line is, this. Just what does Louisiana have to lose? The legislature and the insurance department have offered up a series of schemes that made little sense. Bad ideas were implemented including making outright grants to insurance companies (your tax dollars), creating a state-run insurance company that was fraught with poor management and now want to bilk policyholders with a 63% rate increase, and a failure to involve the Louisiana congressional delegation to seek a federal program similar to the one created following 9/11.
None of these proposals are that original or rocket science. It’s a matter of emphasis. And the Governor obviously has to become involved. There are ways to resolve this major insurance crisis. But it will take more focus and much stronger leadership. Isn’t the time right Governor?
Peace and Justice
Jim Brown
Jim Brown’s syndicated column appears each week in numerous newspapers throughout the South and on websites worldwide. You can read all his past columns and see continuing updates at http://www.jimbrownla.com. You can also look over a list of books he has published at www.thelisburnpress.com.