Louisiana Gov. Kathleen Babineaux Blanco

August 26, 2004

Laying a Foundation for Long Term Success

By Stephanie K. Jones

Being first is not a new thing to Kathleen Babineaux Blanco, who was sworn in on Jan. 12, 2004, as the first female Governor of Louisiana. Twenty years earlier, at the beginning of her career in public service, she was the first woman elected to represent the people of Lafayette in the state Legislature. Five years after that she became the first woman to serve on the state’s Public Service Commission. Then, in 1993 and 1994 she served as the first female chair of the Commission.

Since entering the Governor’s office, Blanco has focused on economic development in the state and has worked closely with Insurance Commissioner J. Robert Wooley to bring about legislative and regulatory changes designed to make the state more attractive to businesses and the insurance industry.

Following are excerpts from an e-mail interview with Gov. Blanco.

Insurance Journal: You’ve asserted that Louisiana is “open for business” and that economic development is a major goal of your administration. How do you see insurance conditions in your state as affecting that goal?

Blanco: I believe that insurance conditions are improving in Louisiana. Our state’s auto insurance rates remain high but are currently rising slower than the national average. In 2003, the Department of Insurance reported that rates approved by the Louisiana Insurance Rating Commission rose an average of 3 percent, compared to a nationwide average of 7.8 percent. In 2002, rates in Louisiana rose 11.8 percent, compared to that year’s nationwide average of 8.8 percent. With the implementation of new laws like Flex Band, we’re hoping that the rate of growth will continue to stabilize.

The most significant reforms of Louisiana’s insurance laws have been in place for several months. As word spreads about the improvements, we expect to attract more insurers, which will ultimately lead to more choices and better prices. That is good for the consumers and businesses of Louisiana.

I am playing a major role in Insurance Commissioner Robert Wooley’s company outreach efforts, giving me firsthand knowledge of our insurance challenges and what we are doing to address them. The continued improvement of Louisiana’s insurance climate has a positive impact on economic development, so I will continue to help improve the state’s market.

IJ: In your view, what are the best ways to balance economic development initiatives and insurance/tort reforms with the need to protect consumers?

Blanco: Ongoing insurance and tort reform encourages competition among insurers, improving the choices available to Louisiana businesses and consumers as they shop for insurance. Previously limited competition in Louisiana’s insurance markets drove prices higher for a captive customer base with no access to better prices. We welcome new insurers to the Louisiana market, as they strengthen economic conditions and cut rates to compete for new business among consumers.

On the economic development front, insurance companies themselves are taking advantage of improving conditions for operating in Louisiana. I continue to work closely with Direct General Insurance Company as it plans for expansion in Louisiana, including the addition of hundreds of jobs to its operations in Baton Rouge.

IJ: The high cost of medical liability insurance is a big issue for physicians and hospitals around the country. How would you describe Louisiana’s experience in this area?

Blanco: Louisiana has achieved stability in many insurance markets, most notably medical malpractice and workers’ compensation. Our medical malpractice law limits physician liability by prohibiting punitive damages and capping general damages at $500,000.

Medical malpractice claims are mediated by the Patient’s Compensation Fund through a physician peer review panel, paying in excess of the first $100,000 of a claim. This limits an insurer’s liability to the first $100,000.

Our state also boasts a healthy workers’ compensation market. Among the worker’s compensation reforms in place are several dispute resolution procedures aimed at lowering costs. Medical fee schedules have also been implemented to help hold costs down. The Louisiana Workers’ Compensation Corporation (LWCC) continues to help address problems in the state’s residual workers’ compensation market. These reforms have created strong market conditions in Louisiana, improving insurers’ profitability and compelling a steady increase in the writing of workers’ compensation plans.

IJ: What are the successes of the initial legislative sessions under your leadership as Governor?

Blanco: The accomplishment that I am most proud of thus far, is landing the Union Tank Car Company, and bringing more than 800 new jobs to Louisiana. Through my continuing talks with the company, the hard work of the Secretary and staff of Louisiana Economic Development, the competitiveness of Louisiana’s workers and the strong incentive package we were able to offer the company, we convinced Union Tank Car to choose Louisiana.

This major manufacturing facility is the nation’s largest manufacturer of railroad tank cars, and will employ 850 workers (in addition to another 150 supplier jobs the plant will create).

The project is an excellent example of coordination and cooperation among state departments—including my office, Louisiana Economic Development, Labor Department, and the Community and Technical College System.

Another important aspect of this project is that it shows that Louisiana can compete successfully for good-paying manufacturing jobs. Our success sends a strong signal to our citizens that Louisiana has in place all the right elements for economic success.

I am also proud of the legislation we passed to phase out the corporate franchise tax on debt and the sales tax on manufacturing machinery and equipment, which will strengthen the economy of our state, and the stronger ethics requirements we passed creating higher ethical standards for our elected leadership.

IJ: What more would you like to see happen?

Blanco: We were delighted to receive news of the additional revenues that will be generated by the economy this fiscal year, but it is still not enough to address our ongoing health care crisis or my goal of raising teacher pay. We must develop and implement a long term plan that will enable us to address the education and health care needs of all Louisianians.

Editor’s Note: To read the full interview with Gov. Blanco, see the Aug. 23, 2004, issue of Insurance Journal – Texas/South Central.

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