La.’s Gov. Blanco: No Quick Fixes for Insurance Woes

Louisiana Gov. Kathleen Blanco met with insurance industry executives on Aug. 17, seeking ways to keep insurers writing homeowners policies in Louisiana after the twin punches of hurricanes Katrina and Rita.

The private meeting produced no agreements or revelations that would lead to new legislation or policy changes, Blanco said afterward.

The governor and a State Farm Insurance Co. spokesman agreed that all involved are looking at long-term changes in how insurance policies are written in Louisiana – nothing that could go into effect before the end of the 2006 hurricane season in November.

“There is no silver bullet,” Blanco said.

In all, about 25 insurance industry executives attended the two-hour meeting at the Capitol, including officials from Louisiana’s two largest insurers, State Farm and Allstate Corp.

Blanco and State Farm spokesman Morris Anderson said the state and the industry must figure out how to keep homeowners insurance affordable and readily available, while protecting insurers from excessive risk if the state is hit by more storms.

Statewide, homeowners policies have gone up an average of 12 percent since the storms, including decreases in some northern parishes and spikes of over 50 percent in coastal parishes, Insurance Commissioner James Donelon said.

Louisiana must get through hurricane season without more storm damage before any significant changes in policy or law can be implemented, Donelon said.

“If we can get through this hurricane season … I think we’ll see a softening of the market,” Donelon said.

Some lawmakers have suggested that Blanco should call the Legislature into special session – its third since the storms – to change state insurance law. Otherwise, the Legislature is not scheduled for its next regular session until April 2007.

Blanco repeated on Aug. 17 that she has no plans for another special session.

Also on Aug. 17, a federal judge ruled against Allstate in the company’s legal challenge to two new state laws giving policyholders more time to sue their insurers over hurricane coverage.

Allstate lawyers argued before U.S. District Judge James Brady that the case should be heard in federal court, while attorneys for the state said it belonged in a state court. Allstate argued that the state laws are unconstitutional because they would interfere with existing contracts between the insurer and its customers – an issue that the company claimed could only be heard in federal court.

Brady ruled against Allstate, saying the challenges should be heard by a state judge because the Legislature spelled out the process under which the statutes should be challenged.

An Allstate lawyer said the company would probably not appeal.