Political Horizons for Oct. 12, 2008

• By MARK BALLARD
• Advocate staff writer
• Published: Oct 12, 2008 - UPDATED: 12:00 a.m.

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In “The Reivers,” William Faulkner tells a fable about how house cats were once the dominant creatures on earth. Cats became frustrated after ages of trying to figure out how to address the world’s many problems.

Because all these woes were insoluble, they decided to abdicate their superiority and chose a “lesser species” to run the world.
They chose humans because they are “optimistic enough to believe that the mortal predicament could be solved and ignorant enough never to learn better.”

Louisiana lawmakers haven’t made much headway on this state’s many insurmountable problems such as public schools that don’t educate, uneven health care, poorly maintained roads, poverty that includes one of every five residents and more people leaving the state than moving in. But they have started to look at remedies that address a problem discovered after the recent hurricanes: ever increasing premiums for property insurance policies that protect New York mortgage bankers from catastrophic losses but abandon Louisiana property owners who need to repair their houses and businesses.

Insurance companies began requiring “named storm” deductibles with their policy renewals this year. Last year, property owners were required to pay the first $500 or $1,000 to repair damages caused in a hurricane.

Now, when a named storm, like Gustav or Ike, moves into the Gulf of Mexico, homeowners have to pay an amount equal to the percentage of the building’s value before insurance kicks in. That’s up to $7,500 out of pocket on a modest house valued at $150,000.

 The average damage from Katrina was $15,000 — or the cost of an Allstate Insurance Co. deductible on a house worth $300,000.

This is all part of a strategy to make doing business in this hurricane-prone state attractive to more insurers.

 The idea is that increased competition eventually will lower premium prices and make named-storm deductibles more reasonable.
Florida chose a different strategy.

Basically, Florida created an agency that offers homeowners low-cost hurricane policies that pay for most repairs. Florida officials told State Farm, Allstate and other companies which sell both kinds of policies that if they wanted to sell highly lucrative automobile insurance to Floridians, they must also offer hurricane coverage.

State Rep. Chuck Kleckley, R-Lake Charles, who chairs the House Committee on Insurance, said the Florida model exposes those taxpayers to the possibility of having to pay out $440 billion. The entire state of Louisiana has fewer people than the Miami metropolitan area alone. “We can’t afford that model. No way,” Insurance Commissioner Jim Donelon said.

Kleckley, other legislators and state officials say they are  at work on possible legislative options to provide property owners some relief. The exact plans remain secret for the time being because Kleckley said he doesn’t want to go public until the package is complete. But generally lawmakers are looking at ways property owners can afford their portion of the deductibles, possibly vouchers, possibly tax credits. None of the plans will do away with named storm deductibles for fear of undermining the strategy that the competition eventually will help regular people.

“The problem is, all government is complex,” said state Rep. Eddie Lambert, R-Prairieville, vice chairman of the powerful House Appropriations Committee. “Everything you do was going to be a pro side and a negative side.”

Into this intricacy, insurance companies and financial institutions advance nuanced plans that, understandably, most benefit their shareholders. That’s not to say those ideas lack viability. Rather, it’s a question of how much consideration competing ideas are given during this time when the legislative remedies are being shaped.