INSURANCE REGULATION LACKING IN LOUISIANA!

Monday, January 29^th, 2024

Baton Rouge, Louisiana

INSURANCE REGULATION LACKING IN LOUISIANA!

 When I first took over as insurance commissioner in 1991, things were really in a mess. Regulation by the Louisiana Insurance Department was nonexistent. Companies were rarely if ever examined as required by state law. I shut down forty  insurance companies that were broke and never should have been licensed in the first place by the previous commissioner. I couldn’t imagine things being any worse. Well I was wrong. Fast forward to what the brand-new insurance commissioner faces today.

The cost of insurance for Louisiana policyholders, both for automobile and property protection, continues to be at the top of the heap, with Louisiana having the highest rates in the nation.  Smaller insurance companies, that often had limited capital and  surplus and that never should have been approved to sell insurance in Louisiana in the first place, we’re approved by the department of insurance. Then, one after another these financially shaky companies went broke and quit paying claims.

These smaller companies were allowed by the insurance department to send hundreds of millions of dollars to so-called “affiliates.” The Louisiana Insurance Department says that they were “misled, manipulated and deceived.”  That would seem to be a cop out by policyholders who could not get their legitimate claims paid. It’s kind of like the old New Orleans Saints famous quote of “woulda, coulda, shoulda.”

The insurance department claims that this passing of policyholder dollars to affiliates is legal. Hogwash. In my 12 years as insurance commissioner, my office never hesitated to hold any insurance company liable and responsible for illegally passing premium dollars to some affiliate.  Not holding insurance companies accountable when they siphon off dollars to some affiliated company is tantamount to no regulation at all. Might as well just abolish the insurance department all together.

Let me give you an example of how unregulated some of these insurance companies were.  One insurance company allowed to do business in Louisiana by the Department of Insurance was Southern Fidelity. Here’s how they spend taxpayers’ dollars. According to the Wall Street journal, insurance company funds were spent on a large hunting lodge, quail courses, bird dogs, horses, a guesthouse, duckponds, and fishing lakes.  The lawyers for the company’s president said this property was a “personal residence.” Yet Louisiana policyholders footed the bill. It took almost $500,000 a year just to maintain this lavish residence.

Blue Cross is the largest health insurance company in Louisiana. Back in 1994, when I found out the company’s board of directors was misspending Louisiana policyholder‘s premiums on travel, an airplane for numerous personal trips of company officers, and other outlandish spending, I immediately fired the board, took over the company, and appointed and entirely new board of directors as well as other company officials.  No lag time and no delays, no dillydallying.  Immediate action was necessary  and required by Louisiana law. Today, Blue Cross is one of the healthiest companies in the nation.

When an insurance company goes bust and is taken over by the insurance department, all the claims that are owed to policyholders are administered by a state created group called the Louisiana Insurance Guarantee Association (LIGA).  It is supposed to provide a safety net to get policyholders claims paid. The group is overseen by the insurance commissioner. But LIGA is being accused of lengthy and unjustified delays. And it is immune from paying attorney’s fees and penalties, even though it acts irresponsibly. Mark Montiel, a Louisiana attorney who represents policyholders says this: “ LIGA does not give a s*** about resolving any of the cases it has.  I’m baffled by LIGA’s propensity to fight instead of settling claims that are owed. I’d be shocked to ever see anyone get paid fairly again.”

Newly elected insurance commissioner Tim Temple has just taken over his new office. It would be an understatement to say that he has his hands full. For the sake of hundreds of thousands of Louisiana policyholders, we sure wish him well.

Peace and Justice

Jim Brown

Jim Brown’s syndicated column appears each week in numerous newspapers throughout the nation and on websites worldwide. You can read all his past columns and see continuing updates at http://www.jimbrownusa.com.  You can also listen to his weekly podcast at www.datelinelouisiana.com.