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Hijinks call for abolishing Commission, Citizens revamp

It’s interesting and perhaps more than coincidental that as the Louisiana Legislature considers abolishing the Louisiana Insurance Rating Commission where some of its members complain about insurance rate increases and as the state-owned property insurer Citizens Property Insurance Corporation is discovered to have accounting irregularities, that the two are connected.

Three vocal critics of ridding the state of the Commission, the only one in the nation and on which its political appointees have the power to approve of rate increases of more than 10 percent, also who have been reluctant to grant large post-disaster rate increases to private companies, Steven “Rock” Ruiz, Jabari Ragas, and Joe Godchaux apparently benefited from hunting and fishing trips whose legality have been questioned by state auditors. In addition, Ruiz serves as a board member for the Property Insurance Association of Louisiana which also received almost $200,000 dollars of questionable funds from Citizens. Also getting perks was the chairman of LIRC, Chad Brown.

Even so, in December, 2006, LIRC rejected whopping increase requests for Citizens. The stated reason was the recently-revealed accounting mess at Citizens which prevented knowledge of financial records for the previous two years. But a month later, their tune had changed. The three commissioners then let the increases through, excusing their vote by saying that state law apparently does not allow LIRC to regulate Citizens’ rate increases. (Not included in the largesse were another commissioner who has provided vocal support, Barry Busada, and its only commissioner calling for LIRC’s elimination, Prof. Christine Berry.)

In other words, commissioners who received benefits from lobbyists working on behalf of Citizens at first denied a rate increase, then claimed they couldn’t stop it. If there was anything more convincing that could happen to validate charges that LIRC was too political of a body, it’s hard to think of one.

At least legislation to accomplish that, SB 185 and HB 860, seem well on course. But, despite the financial records problem and dubious spending, HB 962 which would allow Citizens to compete more effectively with potential competition continues to advance, surviving a narrow committee win along party lines – Republican state Rep. Tom McVea crucially defecting to allow the one-vote win – despite Insurance Commissioner Jim Donelon’s opposition.

The bill languishes on the House calendar as support for passage remains uncertain even with a Democrat majority. As long as the financial and ethical mess at Citizens continues unresolved, legislators would be foolish to grant it greater competitive ability that could allow it potentially to cheat, intentionally or otherwise, more taxpayers and policy-holders.

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