14 May 2007

Committee action, May 14: HB 860

HB 860 by Rep. Karen Carter would abolish the Louisiana Insurance Rating Commission. The House Insurance Committee took up formal consideration of the bill after taking some testimony from it the pervious week. In its place it would give power to the Commissioner of Insurance to review and rule on the request in 45 days. A new office, Deputy Commissioner of Consumer Advocacy, would be created exclusively to take the side of the consumer in disputes. The bill would continue the practice of allowing a public hearing with the commissioner upon his request. As with below-10 percent present procedure, the department would review all requests and make a recommendation. As a result, “flex-band” approval for personal lines of insurance would change from 30 to 45 days; typically, requests for less than 45 days are uncommon.

Rep. Jim Tucker wondered whether the new position should be housed in the department. Deputy Commissioner Chad Brown argued the process would be more efficient and would not play favoritism to the department, saying that was the experience in other states. Scalise suggested public notification the results of decisions.

Rep. Troy Hebert asked how the state would be more attractive without LIRC, even with such high rights. Brown said the industry’s perception was negative about it, and in fact those high rates might be caused by LIRC, with insurers fearing that any cuts in rates when conditions warranted would not then be granted back by LIRC when conditions changed. Hebert wondered how many times LIRC went against departmental recommendations. Brown said it has happened often in the past, but not much recently. Hebert questioned that with high rates now, would rates go higher without LIRC. Brown said before the hurricane disasters on 2005, some companies were taking rates down and reemphasized that companies would file more appropriate rates to specific situations without the fear of a political body potentially interfering with market mechanisms.

Hebert pointed out that a political agent still would have ultimate authority. Chairwoman Carter replied that the shift from an unelected body to an elected official accountable to the electorate would eliminate an excuse used by industry to keep rates higher, and the bill was one thing in a series of things to help bring rates down. Hebert also drew the point that the new advocate was an appointee of the commissioner and that costs would go up.

Rep. Shirley Bowler wondered about consumer rights in the bill, and thought there were a number of imperfections in how they were stated. She said she will offer amendments on the floor to clarify by stating new rights would not be created, and one for the committee concerning the language of the rights. The latter was taken up immediately and adopted without objection.

Rep. Jean-Paul Morrell asked what were the results of states that had similar commissions in the past and what happened after abolishment? Brown could not give specifics but he said generally moving towards a broader implementation of file-and-use tended to bring rates down in other states.

Rep. Mike Walsworth wondered just how different the new advocate position would be. He argued that if complaints are being handled adequately now, why should a position be created strengthening the position. Carter said this was additional security, now that there wouldn’t be a commission to appeal to.

The bill, as amended, was reported without objection.

HB 436 was sent to the House Appropriations Committee, being that its fiscal note indicated greater than $500,000 would be spent on its implementation.

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