Despite his age (78) and longevity in public office (17 years as insurance commissioner and five decades total in politics), Jim Donelon’s retirement announcement last week was somewhat unexpected.
Maybe it shouldn’t have been.
A more fitting question than why Donelon would forgo a reelection race at this relatively late date might be why anyone would want to be insurance commissioner in the first place, when voters are livid over the skyrocketing cost and scarce options for insuring their homes and looking for someone to fix a problem that is largely beyond any one official’s control.
Donelon has been working on it, and his plan to lure private companies back into the market after multiple company failures and departures is showing early signs of success; nine insurers have applied for $62 million in state incentives to write policies, surpassing the $45 million Donelon asked lawmakers to put toward the program during a special legislative session.
Still, if he ran, he’d have to explain why his oversight of similar strategy following hurricanes Katrina and Rita didn’t leave the state’s market in better shape to absorb the effects of more frequent and larger storms in recent years.
Donelon will happily describe to all comers the initiatives he pursued following the twin 2005 disasters, when the property insurance market in Louisiana tanked.
He considers the incentive program he put in place then a success and credits it for stoking interest in the market, although much of the incentive fund to write more policies near or below I-10 went unclaimed and some companies had to return money for failing to meet the state’s terms.
The market did eventually recover, only to collapse again under the weight of four hugely destructive storms in 2020 and 2021. Since Hurricane Laura flattened the Lake Charles area three years ago, a dozen insurers doing business in Louisiana have failed and over a dozen more have stopped offering coverage, and the price of insurance for those who can still get it on the private market has soared.
With no other options, well over 100,000 homeowners have had to turn to the Louisiana Citizens Property Insurance Corp., the state’s insurer of last resort, which by law is required to charge above-market prices — a painful irony when the market isn’t selling. On top of that, Citizens rates rose an average of 63% at the start of this year and are expected to climb still higher.
Commissioner Jim Donelon to answer your questions about Louisiana’s insurance crisis
There are policies an insurance commissioner can support to try to lower rates and increase availability, but they’ll take time and money. One is the incentive approach that Donelon has long embraced, which lawmakers could expand. Another is stronger building codes with accompanying funding to help homeowners meet them, which he is expected to back in the upcoming legislative session.
And it seems only fair to waive the Citizens upcharge, designed to keep the public insurer from competing with the private sector, for those who don’t have other options.
But no insurance commissioner can fight Mother Nature, and the growing number of superstorms fueled by climate change. That, more than anything, has created the status quo.
Whatever he did, Donelon would have been the face of that status quo in the fall commissioner’s race, and likely the target of understandable fury from voters. Pandering to outrage isn’t the courtly Republican’s style, and it’s not something any incumbent — certainly not one who loves to delve into the weeds of policy — can easily pull off.
Even off the ballot, he’ll surely be the target for candidates in a field that already includes insurance executive Tim Temple, a fellow Republican who gave Donelon a run for his money before the current crisis.
For those hoping to replace Donelon, criticizing him on the campaign trail is going to be a lot easier than explaining in detail how they can do better.
The prize for the successful candidate, though, is that the next commissioner could find the pitchforks pointed in their direction, perhaps sooner than they think.
Alice J. Roden started working for Trending Insurance News at the end of 2021. Alice grew up in Salt Lake City, UT. A writer with a vast insurance industry background Alice has help with several of the biggest insurance companies. Before joining Trending Insurance News, Alice briefly worked as a freelance journalist for several radio stations. She covers home, renters and other property insurance stories.