Quin Hillyer: Gov. Jeff Landry's insurance bill remains an abominable mess

State legislators failed to show enough spine to block or even improve a terribly misguided insurance-regulating bill, pushed by Gov. Jeff Landry, that will over-centralize overly arbitrary power in the hands of Louisiana's current and future insurance commissioners.

House Bill 148, as now passed by both the state House and Senate and signed by Landry, is a flat-out bad law. Two particular provisions in it make it noticeably worse than the already-problematic version of the bill that was originally introduced (as House Bill 576) in the House.

Every legislator with an ounce of sense knows how important the difference is between the words "may" and "shall" in legislation. And every legislator claiming to be in any way a constitutional conservative should heed the antipathy the nation's founders held against highly concentrated arbitrary power. As James Madison, the "Father of the Constitution," explained at great length in the Federalist Papers, the nation's charter was specially designed to guard against such power.

HB148 falls horribly on the wrong side of both the may/shall test and of the warnings against arbitrary, concentrated authority.

The first bad provision is one about which I have written twice this spring. Legislators still got it wrong.

As originally introduced, the bill would have given the insurance commissioner, acting alone, the ability to reject requests for rate increases that he determines are "excessive," but specified that he "shall not make such a determination if the rate is actuarially justified." In other words, even when assuming additional, unilateral power, the commissioner at least would be obliged to justify his decisions by reference to real data from actuarial tables and evidence.

Every Louisianan should want regulatory decisions to rely on empirical data, not on personal whims or political favors.

At Landry's personal direction, the House passed HB148 without any reference at all to actuarial data. Such a provision could be an open invitation to corruption.

Sensing blowback, the Senate re-amended the bill so that it again refers to actuarial data. The amendment, alas, is a fig leaf so puny and tattered that in reality it covers virtually nothing. The newly signed law now says the commissioner "may" give "consideration" to "other relevant factors… including but not limited to rates computed in accordance with accepted actuarial standards."

Repeat: "May." And even then, actuarial soundness is only afforded a passing "consideration." That's a long, long way from the original prohibition against arbitrary power as expressed in the language that had said the commissioner "shall not" disapprove a rate request if it is actuarially justified.

Indeed, with the Senate-passed wording, the reference to "actuarial" is so open-ended as to be all but worthless. By this wording, the commissioner also "may" give "consideration" to whether he spilled coffee on his tie that morning or whether he saw an alligator on the road on the way to work. Or whatever.

By contrast, Florida, which has had significant recent success in controlling insurance rates, requires that the insurance-rating office "shall" use "generally accepted and reasonable actuarial techniques," and then lays out a list of 15 specific factors to be assessed in the decision. Now that is how to provide public transparency and accountability. The final version of HB148, by comparison, is a joke. Or would be, except that it's not funny.

The new law also contains several other serious flaws, but of course, a number of legislators felt pressured to give the governor a "win" of some sort on this issue on which he has staked so much political capital. Yet even if that pressure seemed overwhelming, they should have fixed at least one other bad provision.

As amended, the law also gives the commissioner power not just to decline rate requests, but to order "a refund of any sums deemed to be discriminatory or excessive." Not only is this "deemed to be ... excessive" language untethered to actuarial data, but it also has no time limit. A commissioner could order refunds for premiums paid five years ago, or even ten.

How, pray tell, can a company feel confident in a state in which a sole, arbitrary decision-maker could punish them for business done years ago in full accordance with law at the time? For purely political reasons, a future commissioner could use this provision essentially to bankrupt the Louisiana outlet of any company that politically disfavors him.

Insurers likely would flee the state altogether rather than be governed by such whims. With less competition, rates eventually wouldn't fall, but instead rise even more.

Because of the provisions on refunds and on actuarial requirements, this new law is downright abominable. Voters should consider punishing any legislators who approved it — and do likewise to the governor who shoved it down their throats.