In marked contrast to the bellicose approach of Florida officials under Gov. Charlie Crist, Louisiana, in the down insurance market on the southern Coast after Hurricane Katrina, decided on the soft sell. In one way, you could say, Louisiana didn’t have a lot of choice. Unlike a big, populous state such as Florida, Louisiana like most states has little leverage with insurance companies — if it threatens to shut them out or impose onerous or stupid regulations, insurers don’t lose all that much by packing up their suitcases. When you’re the fourth guy off the bench on a basketball team, your threats to quit if you don’t get your way are insufficiently persuasive.
However, reality often has little to do with the course of conduct of politicians and their sort, so Louisiana could have followed the path of Florida. But it didn’t. And there are indications that Louisiana’s relatively hands-off approach, combined with a relatively small state subsidy for insurers, is producing positive results for consumers. This Becky Mowbray story in the Times-Picayune says that private insurers are beginning to buy up policies formerly held by the state-run insurer, the laughably corrupt Citizens Property Insurance Corp., to the point where the state insurer will soon hold less risk than it did before Hurricane Katrina struck. Although she took deserved heat for her handling of the Katrina aftermath, praise is in order for former Gov. Kathleen Blanco, who backed the softer approach, and to other state officials including Insurance Commissioner Jim Donelon.
Meanwhile, Florida continues its nostalgia tour, reaching back to the dark ages of economics for inspiration — central planning, price controls, table-pounding tirades and harangues by the state’s highest elected official and many more embarrassing features.