Louisiana’s Robert Wooley: Leaving office, not the industry

Louisiana Insurance Commissioner Robert Wooley announced he would step down as commissioner Feb. 15, 2006, leaving the office he has held since 2000. Although he is returning to the private sector, Wooley indicated he plans to remain active in the insurance industry.

Chief Deputy Commissioner Jim Donelon takes over the post upon Wooley’s departure.

Wooley was named acting commissioner in October 2000 after his predecessor, Jim Brown, was convicted in federal court for lying to the FBI. Brown was the third Louisiana insurance commissioner in a row to have been convicted of a federal offense while in office.

Elected to the office in November 2003, Wooley’s tenure, by contrast, has been marked by many successes. He played a critical role in the modernization of Louisiana’s regulatory system and worked diligently with agent groups and others to encourage insurance companies to return to Louisiana or increase their involvement in the state. The announcement of his resignation generated praise from both agent and insurer organizations.

“Under Commissioner Wooley’s leadership Louisiana’s insurance marketplace improved significantly,” remarked Greg LaCost, assistant vice president and regional manager for the Property Casualty Insurers Associa-tion of America. “Wooley’s tenure at the department was characterized by his progressive attitude toward bringing competition to the insurance marketplace. His commitment to economic development and maintaining a vital insurance marketplace were never more evident than in the aftermath of Hurricane Katrina, where he demonstrated outstanding leadership during a period of unprecedented challenges for consumers, insurers and regulators.”

Wesley Bissett, senior vice president of government affairs and state relations for the Independent Insurance Agents & Brokers of America stated, “While Commissioner Wooley will appropriately be remembered for his leadership and service to his fellow citizens in the wake of Hurricane Katrina, no one should forget his successful efforts to modernize the Pelican’s State’s regulatory system and to make that state a more competitive marketplace. He will be missed by consumers and insurance agents in Louisiana and across the country, and the Big “I” wishes him well in his future endeavors.”

Wooley recently spoke with Insurance Journal about the 2005 hurricane season, as well as his plans for the future. Following are excerpts from that interview:

IJ: Talk about your experience with Hurricanes Katrina and Rita.

RW: It’s been a challenge to balance the interests of consumers and the interests of the industry because as we’ve found out, we not only have to make sure that consumers get paid everything that they’re owed, you also have to maintain a marketplace after these storms. Katrina was the largest natural disaster in American history and companies have had a hard time dealing with it. There’s been a lot of logistical challenges, it has taxed the manpower of the industry. It has just been a real challenge to make sure that you’re fair and protect the consumer but also keep in mind that you do have to have a marketplace.

IJ: What kind of reaction have you gotten from the various constituents?

RW: We’ve had 950,000 reported claims so far between the two storms, and we’ve only had somewhere in the neighborhood of 5,000 formal complaints. So, I think that says that people … may not be totally satisfied, but if they were underinsured, they realize the problem. …

In talking with the insurance industry, they haven’t committed to bolting from the state, so I think for right now we’ve done a pretty good job of balancing the interests of the two different sides. And it’s been difficult to do.

IJ: Have the hurricanes wiped out the progress made in bringing insurers to the state ?

RW: I don’t know if they’ve wiped out the progress. We had dropped the number of policyholders in our Citizens corporation from 135,000 down to 125,000, so we were making some really good progress in taking policyholders out of the market of last resort. That is going to change.

We’re likely going to gain a number of policyholders. They tell me it could be as many as 100,000 additional policyholders.

What we had done was successful. Unfortunately we didn’t have enough time with Citizens to build the reserves for it to operate in the manner in which we would like to have seen it operate after a disaster like this.

There’s going to be surcharges to policyholders. We were hoping to be able to build the reserves up enough for that not to happen. It’s going to be a difficult time, but if we just continue on the path that we’re on, I think that we’ll get back to the point where we will have a very competitive marketplace.

IJ: How will Citizens continue to operate?

RW: We’re going to borrow money, which is what the plan was if we had a disaster that outstripped the reserves. Those loans will have to be paid off over time. We’re hoping to have them paid off over a 10-year or shorter period. It depends on the amount of premium volume.

One of the good things to having an increased number of policyholders is that we’re going to generate more premium volume and hopefully pay of the bonds off quicker and not have to have surcharges on the policyholder for 10 or even 20 years. …

Of course, that all assumes that you don’t have another bad year in 2006. A lot of it’s going to depend on luck. [If] we generate the kind of premium volume we think we’re going to, then we may not have assessments for a very long period of time. …

But it’s better than the old system we had. Under the old system a company like State Farm would have gotten an assessment for somewhere between $300 and $500 million, they would have had 30 days to pay it, and if they got that type of bill, I don’t care how big they are, that’s going to be an incentive to leave.

IJ: Are companies like State Farm and Allstate being charged an assessment now?

RW: They were charged an assessment but it was only a small assessment … compared to the kinds of numbers we were talking about before. But they are able to apply for the ability to surcharge that through to the policyholders. Some companies are opting to do that; some companies are not.

Everybody’s going to have different strategies but I think the changes we’ve made have stabilized the marketplace. I think if we had left things as they were you would have seen a mass exodus of 50 percent of the market, at least, leaving with State Farm and Allstate.

IJ: Can you see any legislative changes that might help the situation even more?

RW: With the largest natural disaster in American history I’d like to think there’s something you could do legislatively but I just don’t know what it would be. I’ve been around this country and stolen every good idea I could steal and there just isn’t anything out there unless you start talking about a national catastrophic fund. The politics of that are really, really tough.

It’s a tough, tough thing to happen to your marketplace. I think sometimes the best thing to do is wait and see what the real impact of the storms will be in the future instead of trying to guess what it’s going to be. Of course the political pressure is to do something immediately so that you look like to the public that you’re on top of everything, but sometimes that’s not the best thing to do. It sends a really bad message sometimes that you’re just floundering and you don’t really know what you’re doing, you’re just reacting to be reacting.

IJ: Legislation for stronger building codes was recently passed. What will it take to implement those and how will they help?

RW: In the affected areas people are going to be rebuilding large portions of those parishes and that’s why we felt it was necessary in the special session to go ahead and push the building codes through. So that in the rebuilding phase those codes can be taken advantage of.

That’s what they did in Florida after Andrew. Once again, we’ve looked to other states to see how they’ve dealt with those situations and how they’ve worked out. It worked out well for Florida. I think we’ll be able to work it out here.

A lot of parishes are concerned about the cost of doing the inspections, but there are provisions in the legislation where they can combine with other parishes to help defray the cost. … In St. Bernard Parish, that’s had damage to every structure in the parish, there’s going to be a massive rebuilding going there. They’re not going to need the same type of manpower five years from now that they need now to deal with all that. So they can scale it back, and work with other parishes to deal with those problems.

IJ: You brought companies into the insurance department building in the wake of Hurri-canes Katrina and Rita to help handle claims, etc. Are they still operating there?

RW: Yes, some of the larger ones still have people [there], some of the smaller companies send people in on a periodic basis. … We still do have company representatives coming in, and we’ve found it to be very helpful, and they’ve found it to be very helpful. We’re not looking to try to build up the number of complaints people file against companies, we’re trying to solve people’s problems. They’re not interested in anything other than, ‘I want my problem solved.’ And we’ve been able to eliminate some bureaucratic problems in companies. You could see problems arising in a pattern and you could contact the company and immediately change those patterns. We were more interested in getting people’s claims paid and I think it worked very well for us.

IJ: What’s next for you?

RW: I have been talking to a number of people who have expressed an interest in me working with them. I’ve talked to a couple of trade associations; I’ve talked to some law firms. I haven’t really decided which direction I’m going to go, but I do know that I want to stay involved in the insurance industry. I’ve found it to be very interesting, I think I have a lot to offer people from a perspective of a former regulator in dealing with some of the problems from the industry side.

IJ: Do you see more politics in your future?

RW: Politics is tough. I did it for a living as far as running other people’s campaigns for years, but being the candidate yourself is tougher. I have a better respect for people that run for office because of the commitment you have to make and personal sacrifice that a lot of people don’t realize public servants make. So I’m looking forward to getting back into the private sector. I’ve learned to never say never so I’m not going to say I’m never going to be involved in politics, but it’s a tough life.

Topics Agencies Legislation Louisiana Hurricane Market