La. House panel OKs abolishment of insurance rating commission

Louisiana should do away with the state commission of political appointees that can block insurance rate increases, the only one left in the country, a House committee decided on Monday.

The House Insurance Committee approved, without objection, a bill backed by Gov. Kathleen Blanco and Insurance Commissioner Jim Donelon to abolish the Louisiana Insurance Rating Commission, a panel appointed by the governor that can prevent insurers from imposing rate hikes of more than 10 percent. The rating commission has no power to block rates of 10 percent or less.

Insurance companies have long complained that the rating commission is a regulatory and political intrusion on free markets. No other state has such a panel.

Under the bill, the state insurance department would create a new consumer’s advocate position, to field complaints from policyholders and argue on their behalf within the department. The advocate could make arguments against rate increases he or she might deem unfair. The insurance department would still retain power to approve and question rate hikes.

Rep. Troy Hebert, D-Jeanerette, wondered if the system would harm the consumer and empower insurers to raise rates at will.

Chad Brown, Donelon’s top aide, said the system has worked well in other states, where the consumer advocate’s role is solely to set forth the arguments and complaints made by policyholders.

“It works out, believe it or not: this person serves as an independent voice,” Brown said.

The bill also has provisions to set up a “policyholders bill of rights,” which would list protections and services that various parts of state law already extend to consumers, such as legible policies and honest advertising from insurers.

The bill, by Rep. Karen Carter, D-New Orleans, chairwoman of the insurance panel, now moves to the full House for debate.