Donelon: 'Living up to making government more accountable'

Louisiana Insurance Commissioner Jim Donelon reported Wednesday the state of Louisiana’s insurance industry at a St. Mary Parish Chamber of Commerce luncheon at the Forest Restaurant.
“As a Republican, I believe in less government and fewer taxes,” Donelon began. “And, since I took office in 2006, as your insurance commissioner, my authorized civil service workforce shrank from 275 full-time employees to 222. And, 12 years later, for this concluded year, my budget was $31 million, whereas my first budget from 2006 was $30 million.
“So, we are doing more for less on your behalf and living up to making government be more accountable and efficient.”
He went on to report having recently repealed an assessment which he said “had been on the books for decades,” that affected every property and casualty policy in the state of Louisiana.
“That will result in a savings of $20 million per year for all of us who buy property and casualty insurance in the state,” he said.
Next, Donelon discussed current insurance particulars as they apply to different types of insurance in Louisiana.
He began with flood insurance, and Louisiana’s national standing as the top recipient of flood insurance benefits nationwide, with $19 billion collected from the National Flood Insurance Program since 1978.
With the program in its 11th short-term extension, set to expire in September, Donelon assured luncheoners that with bi-partisan support, a delegation is working toward authorizing a new extension.
Pivoting to homeowners insurance, he said that since his taking office in 2006, the Louisiana Department of Insurance and the Coalition to Insure Louisiana succeeded in depopulating the “market of last resort,” which until then had held more than one-third of the policies in Louisiana after Hurricanes Katrina and Rita in 2005.
He said the result of the depopulation was the privatization of the homeowners market, which allowed the state to vacate the market, freeing up private insurance companies to better spread the risk globally. This also made it easier for the state to incentivize smaller companies to move to Louisiana, driving competition up and premiums down.
In discussing the state’s insurance challenges, Donelon turned to the auto insurance industry.
He began with commercial auto coverage, saying that commercial truckers in Louisiana are having a difficult time finding suitable coverage.
“The commercial auto arena is deregulated,” he explained. “So, those companies can charge whatever they want, whatever the market will bear. And, they do so.”
He said that 30% rate increases in the commercial market are considered to be “on the low side,” having prompted him to call for tort reform.
As far as private liability auto coverage throughout the state, Donelon said, “Our problem is our claims to litigation rate. We pay the price for that.
“For decades our base (cost for coverage) has been one of the highest in America, because of our claims to litigation ratio.”
He further reported continuing to work in conjunction with fellow litigators to improve auto liability rates in the state through various bills and by altering regulations.
In reference to worker’s compensation insurance, Donelon marked the news as “good.”
He said this year he approved a reduction of 5.6% in coverage costs as recommended by the National Conference of Compensation Insurers, resulting in a total of a 19% reduction in worker’s compensation coverage costs for employers, within the last five years.
“That is great news for employers,” Donelon said. “It is driven by the fact that we have more companies writing worker’s comp in our state today than in any time in our state’s history.
“Competition is really the only way to control prices.”
He closed by saying that making the business environment more friendly in Louisiana results in more competition, which results in lower rates for coverage, as evidenced by the worker’s compensation coverage cost drop.
Also taking place at the luncheon, Ramona Landry, of the St. Mary Parish Office for Economic Development, was awarded by the SMPCOC, Administrative Assistant of the Month for July 2019, and was presented a plaque.