(May 7)
The Louisiana Senate should not accept a bad insurance-rate bill pushed by Gov. Jeff Landry and passed by the state House. Unless the Senate adds at least one specific amendment, the bill is an invitation to unfairness and corruption.
Worse, in the name of keeping insurance rates low, in the long run it could do the opposite. Rep. Gabe Firment, R-Pollock, the chair of the Insurance Committee, told The Times-Picayune | The Advocate’s Tyler Bridges that the bill “could be catastrophic for our insurance market.” Firment is right.
The main thrust of the bill, now (after some legislative trickery) labeled House Bill 148, is to give the state insurance commissioner virtually unlimited authority to reject rate requests submitted by insurance companies. Insurance Commissioner Tim Temple wisely does not want such unlimited power for his office (and for his unknown successors).
The bill would let the commissioner reject the rates, quite arbitrarily, even if the market for that type of insurance is competitive. A politically disfavored company could then be entirely out of luck, even if more objective analyses might indicate its request is reasonable. Companies might be chased out of the market altogether even as other insurers could benefit largely because they play political ball with a future commissioner.
As disfavored companies stop writing contracts in Louisiana, competition could be reduced, with the remaining companies then being able to offer Louisiana consumers a take-it-or-leave-it proposition.
Moreover, arbitrary power essentially becomes an invitation for all sorts of what most people would call corruption even if it isn’t technically illegal. As it is, three Louisiana insurance commissioners in the past 40 years have been convicted of actual crimes — which shows just how corrupting insurance regulatory powers can be. This bill, unwisely, would expand those powers without adequate safeguards.
Before the legislative sleight of hand that changed the bill’s number and official author, I had noted two strong, substantive objections to it. The new bill corrects only one of those flaws, while Landry and his allies pretend that the one correction cures the whole problem.
The bad provision that was dropped would have let the insurance commissioner actually set interim rates on his own. The potential for either abuse or just plain bad judgment there was obvious. The new bill doesn’t let him set the rates, but it still lets him reject rate requests without anything approaching objective reason. And if he rejects rate requests until he gets the rate he wants, that’s a backdoor way of letting him set the rates himself anyway. The potential for abuse is self-evident…. [The full column is at this link.]
