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Into the Void 

The insurance commissioner's race spotlights hefty issues, muddy politics and very few solutions.

Jim Donelon's campaign Web site has an mp3 radio ad attacking his main opponent, James David Cain, for missing key legislative votes after Hurricane Katrina because he was attending a rodeo. Cain's Web site claims that "politics as usual" won't get the job done and accuses Donelon of "profiting from power."

That's just an inkling of the verbal fisticuffs between these two Republicans in their campaign for insurance commissioner.

Donelon also has slammed Cain for making $8,000 from a Colorado pyramid scam that bilked Louisiana investors for more than $90,000. Cain contends he actually lost money on the deal and was introduced to it by a former district attorney from Vernon Parish. But Cain cannot deny that he participated in and promoted the scheme.

On other occasions, Cain has used public records from Donelon's years in the state House during the 1990s to blast Donelon for awarding his own daughter a scholarship to Tulane University and for landing a contract with the Louisiana Insurance Guaranty Association while sitting on the House Insurance Committee.

There are no Democrats in this race. The only other candidate, S.B.A. Zaitoon, is a Libertarian who has not made much of an impact thus far.

According to the most recent campaign finance reports, Cain spent more than $200,000 on a media buy earlier this month but still had more than $781,000 in the bank as of last week. He has been endorsed by former LSU men's basketball coach Dale Brown and by Republican Deanne Henke, a Lafayette financial advisor who recently dropped out of the race.

Donelon has slightly less money on hand -- $561,000 -- but he also made a $500,000 media buy in late August, which should saturate the state before Election Day. Donelon is endorsed by the Alliance for Good Government, highly coveted in many circles, and there are indications that Donelon is the choice among veteran GOP leaders. He has a $2,000 check from former Louisiana Congressman Billy Tauzin, for example. He also has significant African-American support in Orleans and Jefferson parishes, his home base.

But money and mudslinging will only get you so far with a post-Katrina electorate. In separate interviews last week, both candidates were asked what they would do about the scarcity of homeowners insurance in coastal Louisiana, the perceived ineffectiveness of the Insurance Rating Commission and the struggling Citizens Property Insurance Corporation -- the state-sponsored "homeowners insurer of last resort" in Louisiana. Since Katrina, Citizens is on the threshold of becoming the insurer of only resort for many homeowners, who are finding affordable coverage next to impossible to get.

In most cases, the candidates' answers were linked to the weather, Congress, the Legislature or other external factors unrelated to the ability of the candidate or the authority of the commissioner's office. Barry Erwin, president of a Council for A Better Louisiana (CABL), a nonprofit group that monitors state government, says the platforms sound flimsy this year because the challenges are so daunting.

"I don't know of any real plans, per se, in the insurance commissioner's race," Erwin says. "I think their hands are going to be tied in some ways. While I think leadership is at the core, a lot of these issues are intangible."

For instance, when it comes to the Insurance Rating Commission, the government agency that controls rate increases of more than 10 percent, Donelon and Cain look elsewhere for change. The IRC has fallen under heavy criticism in recent years for its political appointees and unique authority -- it's the only board of its kind in the nation.

"That is a decision for the Legislature to make," Donelon says, adding there is no reason to change the IRC. Cain, on the other hand, says he will work to abolish the IRC, even though he voted against such an initiative as a state senator. Don't expect him to act swiftly; he's "hoping it will be an issue during the next governor's election."

Erwin says neither candidate is directly addressing the issue: "It seems the insurance commissioner can, and should, develop a detailed plan for how his office can deal with the IRC directly."

As for convincing more insurance companies to return to Louisiana and start writing policies again, Donelon says the most important thing for the state is to make it safely through the next few hurricane seasons. "That will begin softening the market," he says. Aside from that, he says he'll travel the nation telling insurance companies to "come to our marketplace because it is a viable place to do business with a fair and balanced regulatory scheme."

Cain points to his ethics plan, which would create new positions in the department such as inspector general and complaint resolution officer. The plan also calls for a consumer advisory board and toll-free fraud hotline. "This department has the worst reputation of any other department in Louisiana," Cain says. "We need to change that. People will see we're changing and insurance will become more available."

Both men tout the benefits of a regional or statewide "catastrophe fund," but Congress is best suited to implement that idea. A similar fund was established in Florida following Hurricane Andrew to sustain insurance claim-coverage capacity in the aftermath of a disaster. It serves as a reinsurance program that reimburses insurers for a portion of catastrophic hurricane losses. But Florida Gov. Jeb Bush recently transferred $700 million to the fund -- an amount Donelon says is "like a Band-Aid on a hemorrhage."

Donelon, who lives in Metairie, says some form of catastrophe assistance is needed to pull Citizens insurance out of its current dilemma. Citizens incurred a debt of more than $1 billion following last year's hurricane season and sold nearly that much in bonds to pay off its claims. Those bonds are backed by an assessment on all homeowners' insurance policies in the state. There is talk of using some of the state's expected surplus of nearly $700 million to make initial payments on those bonds so that homeowners don't have to pay the assessment. Meanwhile, Citizens' solvency is in question and consumers are complaining about slow payoffs.

Cain suggests that Citizens should become more like a real corporation, with a board of directors made up of professional insurers, CPAs and other industry representatives. Of course, real corporations have the option of not doing business in Louisiana because of losses.

Ultimately, Erwin says solving problems in a post-Katrina marketplace is going to take a lot more than just one man sitting in one office. "Even though it would be nice," he says, "it's not like the insurance commissioner can wave a wand and make everything better."

Jeremy Alford can be contacted at jeremy@jeremyalford.com.

click to enlarge Republicans Jim Donelon (left) and James David Cain come - out of their corners for verbal fisticuffs in their campaigns - for state insurance commissioner.
  • Republicans Jim Donelon (left) and James David Cain come out of their corners for verbal fisticuffs in their campaigns for state insurance commissioner.
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