House Approves Abolishing La.’s Rating Commission

By | June 6, 2007

Louisiana’s commission of insurance regulators should be abolished, replaced by a new consumer advocate in the state insurance department, the House voted June 4.

Gov. Kathleen Blanco is backing the proposal, also supported by the insurance industry, to abolish the Louisiana Insurance Rating Commission, a panel made up of political appointees who have power to block certain insurance rate increases.

Louisiana is the only state that still has such a commission. Blanco and the insurance industry have argued that the panel only serves to dampen industry’s interest in doing business in the state, because it’s seen as a meddler in the marketplace.

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 retain power to reject rate hikes that are not deemed justified.

The bill is part of Blanco’s package of insurance legislation that she hopes will attract new insurers to the state and stem post-hurricane rate hikes.

The bill overcame opposition from lawmakers who said the rating commission is one of the few advocates that policyholders have when they encounter insurance companies.

Rep. Jeff Arnold said giving the panel’s consumer advocacy power to the insurance department would be like “the fox watching the hen house.”

“We need a watchdog,” said Arnold, D-New Orleans.

Rep. Karen Carter, sponsor of the proposal, disagreed. She said it’s time to do away with the commission and its “obscure way of dealing with rates,” replacing it with the insurance commissioner.

“We have an elected commissioner who can be held accountable by the voters,” D-New Orleans.

The House voted 101-0 to approve the bill.

Carter’s measure goes to the Senate, which has already approved a similar proposal by Sen. Julie Quinn, R-Metairie.

House Bill 960 can be viewed at http://legis.state.la.us/

Topics Louisiana

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