Louisiana faces insurance commissioner question: elect or appoint?

A Tuesday press conference in Louisiana got briefly awkward when Insurance Commissioner Jim Donelon gave way to state Sen. Kirk Talbot for a question on his bill to make the commissioner post – currently an elected position – an appointment.

"We're still good friends," quipped Donelon, a fierce defender of insurance commissioners being elected.

Talbot filed his bill March 31, just two weeks after Donelon reversed his decision to seek re-election to a fifth term.

"Whenever you file a bill to take away an elected position from the voters, it's something that that takes a lot of thoughtfulness and real soul searching," Talbot said.

The main reason for the bill is so Louisiana can attract someone with "expertise" to run the insurance department, Talbot said. The issue of elected versus appointed elicits strong opinions in the insurance world. Thirty nine states appoint commissioners and just 11 commissioners are elected.

Critics of appointed commissioners point to the short-term service. Serving at the pleasure of an elected governor leads to high turnover in the insurance office. The two longest-serving commissioners in the United States – Donelon (17 years) and Mike Kreidler of Washington state (22 years) – are both elected.

'Not engaged in insurance'

In a February interview with InsuranceNewsNet, Donelon, 78, insisted that electing insurance commissioners brings the best outcomes for consumers.

"When you are appointed by a governor, you're really part of that governor's cabinet," Donelon said. "You do what he or she wants done. Those governors tend to be not engaged in insurance, and tend to be more extreme than regulators who get elected to be regulators."

The average term of an appointed insurance commissioner is three years, Donelon added, far too short to learn the business of insurance regulation.

"My bill will have removal protection," Talbot said Tuesday. "We want a commissioner ... to have the freedom to do the job and not worry about being fired every day if they have to make difficult decisions. Because difficult decisions are coming. We're going to have more hurricanes. We're going to have more issues."

The bill parameters

Talbot's bill calls for an insurance commissioner to be selected by the governor from a list of names submitted by a nominating committee. That committee would be comprised of members representing various groups, including the legislature, the Louisiana Bankers Association, the Louisiana Home Builders Association and the state chapter of the National Association of Insurance and Financial Advisors.

The appointment would be subject to Senate confirmation for a six-year term, the bill states. No insurance commissioner could serve more than two consecutive six-year terms.

Ronnell Nolan, president and CEO of Health Agents for America, based in Baton Rouge, La., said her organization opposes Talbot's bill.

"As an association who represents insurance agents and the clients they represent, we believe the public has a right to vet and vote for the candidate of choice," she said. "Appointing a commissioner removes the continuity of the position."

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.