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Adverse ruling gives LA Democrats electoral opportunity
Louisiana Democrats have their opening, the potential to secure a small foothold but when you don’t have anything at all it’s an improvement.
Any realistic chance that the state would not have to fork over in the neighborhood of $105 million evaporated yesterday when the U.S Supreme Court denied hearing an appeal by Louisiana Citizens Property Insurance Corporation to a judgment it owed $105 million in penalties in a class-action lawsuit. State courts had ruled the public corporation had broken state law in making payments too late to policy-holder claims. The state-owned and run organization sells property insurance, mostly the kinds and in areas that private insurers are discouraged from offering, and is backed by those revenues but also can levy an assessment on any policy-holder in the state.
Citizens is run by a board of directors, some appointed by the governor from interest group selections, others by legislative leaders, and even has the state treasurer or his designee. But the official with the most assumed control, the one whose designee his chief of staff serves as chairwoman of it, who steers the process to hire its chief executive officer, and who seems to speak in all official situations concerning it, is Insurance Commissioner Jim Donelon.
Donelon can claim it was a problem he inherited, with the claims largely coming from events previous to his assumption of the job from the resignation of the previous occupant. He can point out that the chief executive from the previous period who would have overseen these matters he had the board fire after allegations of improprieties later sustained in the courts. And it may not become an issue in the sense that the reserves Citizens has built up, from those who pay for its policies, are enough to pay the judgment.
With the next round of state elections three years distant, assuming he will run for reelection, if Citizens has to put on a happy face and pay up without any other repercussions, Donelon probably will survive in office. But if in that interval one or more major storms hits the state that forces Citizens to pay out more than a relatively small amount in claims, that will spell trouble. The judgment wipes out all available cash as of the first quarter of 2012 and is over a quarter of all liquid assets not encumbered by debt. Just one big storm between now and then could cause a repeat of the need to borrow $1 billion after the hurricane disasters of 2005, being paid off still by a 5 percent additional assessment on all policy-holders passed through by insurers.
If that happens, Donelon’s political future becomes problematic. While opponents of any political stripe can use the issue against him, Democrats in particular can benefit. Louisiana has become solidly Republican because of developments long and short in term. The failed economic model propagated by liberalism and its inherent weaknesses and internal contradictions took some time to become evident to the Louisiana public in a state at a lower level of economic development, although the Pres. Barack Obama regime has brought this into greater prominence lately. The nationalization of politics also largely mooted the strategy of many state Democrats to hide the economic and cultural liberalism of their party behind their own professions of social conservatism.
Having lost in the marketplace of ideas, as long as national Democrats continue to embrace those same failed ideas and/or state Democrats cannot or will not move far enough away from them, this means the only way for Democrats to win state offices will be to shift electoral contests away from ideas and towards the issue of competence and management in government. The Citizens fiasco presents just such an opportunity. At least it gives the chance for a Democrat to paint Donelon as being asleep at the wheel, insufficiently monitoring Citizens and its corrupt then-leader in carrying out its most basic function, the failure of which cost $105 million of state money. And if subsequently it happens that this money could have been used to pay off claims that, through bad luck, all state policy-holders end up paying, the charge would carry a great deal of credibility.
Of course, you have to have quality candidates who are in short supply among the state’s donkeys. One of the more high-profile elected Democrats and with an interest in insurance, state Sen. Eric LaFleur, in fact is disqualified because he has sat on the board since 2008 and could have the same problem pinned on him as Donelon. Still, an incumbent with perceived vulnerability might attract a credible opponent from the other party, which means if Donelon finds himself in this position pressure will come from Republicans for him to forswear reelection and make way for another GOP contender.
Posted by Jeff Sadow at 09:40