Officials wrestle with insurance

• By ALLEN JOHNSON JR.
• Advocate New Orleans bureau
• Published: Jun 17, 2008 - Page: 1D - UPDATED: 12:05 a.m.

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NEW ORLEANS — Insurance regulators from five coastal states met in crises-laden New Orleans on Monday to discuss ways to make property insurance rates affordable after hurricanes and other disasters.

Teaming up to play “hardball” with major insurance carriers did not make the list of options, during a luncheon meeting at a French Quarter hotel, co-sponsored by LSU and America’s Wetland Foundation, among others.

Since Hurricane Katrina slammed the Gulf Coast in 2005 — sending insurance rates in Louisiana soaring — some industry critics have suggested that state regulators coalesce to demand that major carriers such as State Farm and All-State offer consumers in hurricane-prone areas the same types of insurance protection provided to other states.

“In theory we could do that,” Jim Donelon, Louisiana’s elected insurance commissioner, said later. “Actually, I don’t know that I have the authority under the law to threaten State Farm’s ability to write in Louisiana if they don’t write in Alabama, (for example).”

Conversely, state insurance regulators in Alabama would face the same potential problem, Donelon said.

“We already have in our state, the highest percentage market share of homeowners’ policies from State Farm and from All-State of any of the 50 states,” Donelon continued. State Farm’s 32 percent market share of homeowners’ policies in Louisiana represents the highest for that carrier in any of the 50 states.

Meanwhile, All-State writes 22 percent of its homeowner’s policies in Louisiana — also, more for that carrier than any other state.

“I honestly am not going to get out of this crisis with new coverage from those two companies — I have to get it elsewhere,” the commissioner said. “I could threaten their (state) certificate (to operate in Louisiana). I could say if you’re not going to write homeowners’ (insurance), you’re not going to get (to write) auto (insurance).” However, no individual state has tried such tactics. Given market conditions, Louisiana is the least likely to go toe-to-toe with major carriers.

“I truly believe our solution lies with other regional companies and hopefully other national, name-brand companies” such as Traveler’s Insurance and Liberty Mutual Insurance Co.

R. King Milling, chairman of America’s Wetland Foundation and vice chairman of Whitney Bank in New Orleans, took no position on the ability of states to require comprehensive insurance.

“This (issue) is a question of this marvelous conflict between public policy and private wishes,” Milling said.

Meanwhile, Commissioner Donelon said that several proposals for national disaster insurance have cleared the U.S. House and advanced to the Senate. An “all perils policy” authored by U.S. Rep. Gene Taylor, D-Miss., calls for the federal government to add coverage for wind damage to the federal flood insurance policy. If approved, the plan would make flood and wind damage insurance available nationwide.

In addition, the Taylor plan would eliminate debate over whether wind or water caused storm damage, by providing coverage for both events. Congressman Taylor, who represents Gulfport, Miss., lost his home to Hurricane Katrina.