Louisiana insurance market recovering, state-run insurer has less risk
In marked contrast to the bellicose approach of Florida officials under Gov. Charlie Crist, Louisiana, in the down insurance market on the southern Coast after Hurricane Katrina, decided on the soft sell. In one way, you could say, Louisiana didn't have a lot of choice. Unlike a big, populous state such as Florida, Louisiana like most states has little leverage with insurance companies -- if it threatens to shut them out or impose onerous or stupid regulations, insurers don't lose all that much by packing up their suitcases. When you're the fourth guy off the bench on a basketball team, your threats to quit if you don't get your way are insufficiently persuasive.
However, reality often has little to do with the course of conduct of politicians and their sort, so Louisiana could have followed the path of Florida. But it didn't. And there are indications that Louisiana's relatively hands-off approach, combined with a relatively small state subsidy for insurers, is producing positive results for consumers. This Becky Mowbray story in the Times-Picayune says that private insurers are beginning to buy up policies formerly held by the state-run insurer, the laughably corrupt Citizens Property Insurance Corp., to the point where the state insurer will soon hold less risk than it did before Hurricane Katrina struck. Although she took deserved heat for her handling of the Katrina aftermath, praise is in order for former Gov. Kathleen Blanco, who backed the softer approach, and to other state officials including Insurance Commissioner Jim Donelon.
Meanwhile, Florida continues its nostalgia tour, reaching back to the dark ages of economics for inspiration -- central planning, price controls, table-pounding tirades and harangues by the state's highest elected official and many more embarrassing features.
On insurance regulation, at least, suggests David Rossmiller. P.S. That doesn't necessarily go to cover former state AGs, though....
David, any thoughts on how that recovery in the LA insurance marketplace will go if the Sher and or Landry cases come down with adverse rulings against the insurance industry? You think the industry will respond by either doing away with all risk coverages, rating up to cover flood exposure/VPL exposure if flood destroys the house, completely pull out of the LA markets, or parts of all of the above?
I do have some thoughts. I just did an interview with A.M. Best in which I said insurers would head for the exits if the flood exclusion isn't upheld, that is, if Sher isn't reversed.
As far as the Landry case, the Valued Policy Law case, that is of lesser urgency but is an important issue also. The Mierzwa case a couple years ago in Florida was one that was similar to Landry, the Legislature in fact passed a law to overturn the result of Mierzwa in future cases, although that only applied to events happening after the law was passed. The Florida Supreme Court then decided a case, Florida Farm Bureau v. Cox, that put the VPL matter to bed. The Louisiana legislature might act on the VPL like Florida lawmakers if the court upholds Landry.
I've been reading that Charlie Crist of Florida, Hayley Barbour of Mississippi, and Bobby Jindal of Louisiana are all being considered by McCain as the number top spot. Interesting in that all three have been affected by hurricanes (or floods as some call them).
Doesn't make much sense to me, McCain will carry all those states anyway. With his temper, the last thing he needs is some table-pounder like Crist, could be billed as the Anger Management Ticket. Incidentally, I used to interview McCain on occasion back in the day in Phoenix. Not a comment on his politics or anything, he was hard for me to like personally, flew off the handle about stuff. He got over it fast though, but his getting over it might not last long.
One of my favorite stories about McCain was told to me by Paul Johnson, who was the mayor of Phoenix in the early 1990s. Paul was on the golf course talking to McCain on a cell phone and they disagreed about some kind of project in the city, and McCain gets mad and starts screaming and then hangs up. Then he calls back to apologize and they start talking again and McCain loses it again and starts screaming.
I recall he chewed me out at some kind of affair honoring Barry Goldwater, can't remember what it was about but I know it was in front of a whole roomful of people. I called him up later because I was still looking for some quotes for the story -- couldn't use the screaming -- and he was as nice as could be.
That's my brush with fame. Plus I saw Don Rickles on a plane once.
One big impact that I see out of Landry is that will open the door to all of the named peril policies and the regular flooding (not levee breach related) plus those related to surge to get their limits paid, even if they had minimal wind damage to the property. All statute of limitations have run in LA from Katrina and Rita, so the impact would be limited unless there are additional ones that come in through a class action cases out there. I wonder if Sher would have any future impact outside of LA down the road as levees are breached or overtopped quite often when heavy flooding of the nations rivers occurs. At least the federal side of the issue in LA had a sensible ruling in the 5th circuit.
I spend more on insurance, than I do on my house payment, property taxes, living expenses, & my child's college cost combined, yet if I have a claim, I've got to go to court to have it resolved. Even when you take a claim to court, the judge's major contributors are usually special interests, i.e. the insurance companies, among others. Originally, the plan was to have insurance risk spread over the entire United States, keeping rate reasonable, instead of making each state it's own profit center. We can thank our paid for national & state legislatures - whether Democrats or Republicans, for this. Ladies & gentlemen, it appears to me it is high time for a new revolution, to re-establish a government by & for the people of the United States of America. I do not advocate violence, but when a government consistently refuses to address the needs & greivances of it's people, change is imperitive!