Louisiana Commissioner of Insurance
Jim Brown was elected Louisiana’s Commissioner of Insurance with nearly 60 percent of the vote. At that time, the insurance industry in Louisiana was in utter chaos. Citing a crisis situation, Brown was sworn in as Commissioner a month early, on December 4, 1991.
Before his swearing in, Brown said, “I had initially planned to take office along with the other state elected officials in January. However, because of the continuing insurance crisis, especially in regards to the growing insolvency problem, I feel that I must address these issues immediately and put the Department on the proper course. If we’re going to get this mess under control, we’re going to have to do it right. And most of the things we are going to do aren’t going to be big surprises. I presented a 70-page plan of restructure and reform to the voters. Since the voters elected me based greatly on the strength of that proposal, I think it would be improper for me not to make every effort to put that plan into action as soon as possible.”
Less than one week after taking office, Brown asked the Joint Legislative Budge Committee for funding to allow the Department to hire 85 additional employees in an effort to better enforce the regulation of the insurance industry. Brown said the Department needed more attorneys, certified financial examiners and investigators. A few days later the Department received approval for $2 million to begin the reform measures implemented by Commissioner Brown.
Brown had the challenge of building an Insurance Department virtually from scratch. And that’s just what he did. In February 1992, Commissioner Brown launched a national tour of major insurance companies to inform executives that stronger regulation of the industry would make Louisiana a sound, stable environment for conducting insurance business. In March of that year, Brown ordered a team of Insurance Department examiners to audit all Louisiana-based insurance companies. This was the first time such intense scrutiny had been undertaken in the Louisiana Department of Insurance.
Commissioner Brown unveiled his plans for creating an anti-fraud unit within the Department of Insurance.
In July 1992, Commissioner Brown named the appointments to the Louisiana Health Care Commission. Brown formed the panel to draft legislation aimed at dealing with the problem of the affordability and availability of health care.
In August 1992, Hurricane Andrew struck Louisiana with great force. Commissioner Brown dispatched Insurance Department personnel to five emergency relief centers in south Louisiana, where the damage occurred, to help expedite insurance claims by working with storm victims and insurance company representatives.
Commissioner Brown sponsored the first Louisiana Health Care Conference September 24-26, 1992. More than 300 health care and insurance industry executives and Louisiana Department of Insurance employees attended the meeting, which was aimed at gathering information to draft proposed reform measures for the 1993 session of the Louisiana Legislature.
In his first year in office, Brown took regulatory action against companies 30 times and shut down 10 insurance companies.
In March, Commissioner Brown unveiled a health care plan designed to bring affordable primary health care coverage to more than half of the state’s one million uninsured citizens. The plan was part of a complete health care reform package developed by the Louisiana Health Care Commission.
That same month, Brown proposed a plan approved by the Louisiana Insurance Rating Commission that expanded the availability of property insurance in the FAIR and Coastal Plans. Originally the Plans offered only basic coverage, or the current cash value of the property. The changes included adding coverage for vandalism, malicious mischief and windstorm damage. Commissioner Brown wanted to expand the availability of property insurance in light of the curtailment of such coverage by insurers that sustained heavy losses due to Hurricane Andrew.
In April, more than 70 bills were filed with the Louisiana Legislature as part of Brown’s legislative package. These bills were designed to bring affordable health care to Louisiana’s citizens, and to chip away at some of the root causes of the high cost insurance due to the large number of drunk drivers in the state.
In June of that year, Commissioner Brown launched SHIIP, the Senior Health Insurance Information Program. Brown created the program to help senior citizens make more educated decisions concerning Medicare and health insurance.
Also in June, 17 bills in Commissioner Brown’s health care reform package were signed into law, including measures allowing policyholders to change insurers without being barred from coverage by pre-existing illness, and another measure that created a basic health care plan for the working poor.
In December, the National Association of Insurance Commissioners (NAIC) announced that the Louisiana Department of Insurance had won accreditation after two years of intensive work. Commissioner Brown’s reorganization of the Department included strengthening the Office of Financial Solvency, creating the Department’ first Insurance Fraud Division, and rewriting the Insurance Code to strengthen provisions dealing insurance company insolvency.
Commissioner Brown’s efforts proved to be the most dramatic turnaround of any public agency in Louisiana’s history. In just two short years, Brown had completely restructured the Louisiana Department of Insurance. He made numerous criminal referrals of insurance fraud to federal and state prosecutors that led to scores of convictions, and he filed lawsuits worldwide against insurance swindlers that defrauded the public.
During Brown’s first two years as Insurance Commissioner, the Department also auctioned off the assets of failed insurance companies. The more than $1 million collected from these auctions went to pay off the claims and obligations of insolvent insurers whose assets were seized by the Department.
For the first time in years, Louisiana was experiencing a stable insurance climate. And newspaper editors across the state praised Commissioner Brown’s success:
Lake Charles American Press, January, 1993
“Jim didn’t rebuild the Department, he built the Department,” said Tom Oglesby, Independent Insurance Agents of Louisiana executive vice president.
“Michael Manes, an LSU instructor and head of Citizens Auto Reform gives Brown an A++ when grading him in comparison with other administrations.”
The Shreveport Times, June, 1993
“Meanwhile current Insurance Commissioner Jim Brown should be strongly commended for transforming one of Louisiana’s most corrupt agencies into a hard working agency dedicated to protecting people – not picking their pockets. Commissioner Brown, thankfully, is replacing the office’s colorful appeal with the public’s trust.”
Madison Journal, Tallulah, La., August, 1993
“The office which he (Jim Brown) took over was in shambles. Brown has worked diligently to bring stability to the insurance industry in Louisiana. He has cleaned house and the people of the insurance industry are complimentary of his performance.”
The New Star, Monroe, La., December, 1993
“What Commissioner Brown has done there, considering the reputation of the Department, has been amazing,” said NAIC President David Walsh, Alaska’s chief insurance regulator.
Commissioner Brown began his third full year in office by conducting a series of town meetings to explore the various national health care reform proposals being debated and what they meant for Louisiana’s citizens.
For the first time in the Department’s history, financial solvency standards were being enforced. In February, the Louisiana Department of Insurance announced it had levied $397,000 in fines against insurance companies delinquent in filing regulatory financial information. By holding 50 hearings a day during a three-week period, the Department was able to collect 100% of the fines imposed.
That same month, the Department announced that the roadblocks of 1993 which allowed Brown and Louisiana State Troopers to begin enforcing mandatory auto insurance coverage on the estimated 40% of uninsured motorists in the state resulted in the collection of $6.8 million in reinstatement fees.
On February 17, Commissioner Brown announced that $635,250 had been collected in fines imposed on insurance companies and agents over the past 19 months by the Louisiana Department of Insurance.
Later that year, Commissioner Brown was featured in Best’s Review insurance publication for his efforts to stamp out insurance fraud. The magazine noted, “The results since Brown took office in December 1991 are impressive: Thirty-two executives of insurance companies have been convicted of various white collar crimes, which are usually difficult if not impossible to investigate and prosecute.”
Denham Springs-Livingston Parish News, June, 1994
“He’s (Jim Brown) generally considered to have done an outstanding job of walking into a very messy situation and cleaning it up very quickly and efficiently.”
Commissioner Brown hosted a conference on health care reform on March 8 that included a program of leading health care professionals.
In April, Brown urged the Legislature to pass a stiffer seat belt law in Louisiana. The measure was signed into law that year.
Also in April, Commissioner Brown announced that the number of companies writing workers’ compensation insurance in Louisiana had risen from one to 97 since he took office in 1991.
In May, in response to recent flooding in south Louisiana, Brown dispatched Department of Insurance employees to New Orleans to help coordinate insurance-related flood relief services in cooperation with the City of New Orleans.
In response to an examination of questionable claims payment practices performed by the Louisiana Department of Insurance, Blue Cross and Blue Shield was ordered to refund $21 million to Louisiana policyholders. The matter was settled in June.
In August, the sale of 250 pieces of real estate, among the assets of an insolvent insurance company, brought in over $500,000 by the Louisiana Department of Insurance. The money was used to help pay claims and other obligations owed to consumers by the financially troubled company.
Commissioner Brown was re-elected to a second term with 60 percent of the vote on October 21, 1995. As of that date, the Department, under Brown’s tenure, had shut down 21 failing insurance companies and made more than 160 referrals that led to indictments of individuals involved in troubled insurance companies.
In December, the Louisiana Department of Insurance was granted reaccreditation by the NAIC.
In early January the Commissioner announced new rules and a new law regarding viatical settlements. The measure was part of Brown’s 1995 legislative package and was designed to protect terminally ill patients who opted to receive life insurance benefits before their death.
In February, the Department announced that in 1995 it had collected nearly $624,000 from delinquent bail bond companies whose clients jumped bond.
Also that month, Brown noted that the insurance industry was granted approval to reduce workers’ compensation insurance rates by 11.6%, which meant a savings of million of dollars for employers and added incentives for hiring.
In June, Commissioner Brown announced that at his request, Governor Foster had signed an executive order creating a task force designed to study insurance rates and to make recommendations to the 1997 session of the Louisiana Legislature. In 1997, this panel garnered legislative approval and became known as CAIRE, the Council on Automobile Insurance Rates and Enforcement.
Commissioner Brown traveled to Washington, D.C. in July to meet with President Clinton to discuss the Senate’s Catastrophic Disaster bill. On the trip, Brown also met with the Comptroller of the Currency to discuss joint guidelines for regulating banks selling insurance.
In August, Brown and Governor Foster hosted a major summit to discuss the continuing efforts to halt church burnings throughout Louisiana.
In September, the Louisiana Insurance Rating Commission, with Brown’s direction, voted to require insurance companies to factor in new laws in pending and future requests for rate increases.
Prudential Insurance Company of American was fined $550,000 in November to reimburse victims of misleading sales practices.
Commissioner Brown announced a January 28 health insurance conference would take place to address recent changes in federal health care laws.
In March, Brown released a legislative plan that proposed the most significant crackdown on drunk drivers and uninsured motorists in Louisiana since driver’s licenses were first required in 1946.
In June, Brown announced that the major bills in his reform package had been passed by the Legislature. Those measures passed included: raising the driving age, limiting the availability of uninsured motorists to recover losses from other drivers, the seizure of vehicles from multiple drunken driving offenders, lowering the blood alcohol content for DWI, and the impoundment of uninsured vehicles.
In August, the law creating CAIRE went into effect. The panel is formed as a watchdog group comprised of 16 members to monitor and report on the enforcement of auto insurance laws around the state.
In September, Brown announced that rates for workers’ compensation insurance had dropped 25 percent over the past two years. Brown attributed the downward trend to antifraud and workplace safety measures.
In January, Commissioner Brown announced an initiative to determine if there were any uncollected insurance claims due to Holocaust victims or their heirs in the state.
In February, Brown announced that more than $1.7 million in fines and penalties was collected by the Louisiana Department of Insurance in 1997.
A few days later, Brown announced a new proposal to extend health care coverage to 100,000 Louisiana children through initiating a federally funded program in the Department of Insurance.
In March, Brown announced that a Louisiana Department of Insurance fraud investigator was honored with the 1997 Fraud Fighter of the Year Award given by CNA Insurance Companies.
Commissioner Brown announced in May an estimated $48 million consumer savings due to an auto rate reduction.
In June, Brown announced a second massive auto insurance rate reduction due to the state’s new “no pay, no play” law, amounting to a $73 million savings to policyholders of almost 300 insurance companies.
Brown said in July that 188 insurance companies faced $1 million in fines for failing to comply with the state’s auto insurance rate rollback reforms.
In August, Commissioner Brown’s Fourth Annual Health Care Conference concentrated on trends and new developments in the insurance industry.
Also in August, following the connection of a new telephone system, Commissioner Brown announced that the Department handled more than 790,000 incoming consumer related telephone calls in the 18 months since the system was launched. The new phone system made a precise count of all incoming calls.
In October, Commissioner Brown dispatched Department workers to handle complaints and offer advice to victims of Hurricane Georges.
A new public awareness campaign targeting aggressive drivers on Louisiana highways was kicked off in December.
Also in December, the Department was reaccredited by the NAIC.
In January, Brown announced that farmers would receive rate reductions and added crop insurance coverage.
In July, State Farm was granted a $15 million rate decrease by the Louisiana Insurance Rating Commission.
Commissioner Brown’s Fifth Annual Health Care Conference was held in August to discuss laws passed in the Legislative session.
Also in August, Commissioner Brown announced that the Department of Insurance returned $2.35 million in unused funds to the state that were budgeted for the last fiscal year. The Department operates entirely on self-generated funds.
In 1999, the Commissioner was indicted just two weeks before the primary election but won a solid victory with nearly 58 percent of the vote in November. In that election, Commissioner Brown was endorsed by 43 newspapers across the state.
People who know Brown or know his reputation, including members of the press, know the charges against him are “politically motivated hooey.” (Shreveport Journal, October 15, 1999)
Commissioner Brown is sworn in for a third term in January.
In the first two months of the year, the Commissioner’s crackdown on fraud continued with the arrest of two insurance agents accused of fraudulent insurance activities.
In an effort to raise awareness about the state’s headlight law, Commissioner Brown partnered with numerous law enforcement agencies across the state in February to promote the new safety campaign.
By May, three more insurance agents were booked for alleged fraudulent activities.
Commissioner Brown also announced in May that Allstate Insurance Company lifted its freeze on issuing new homeowners insurance policies in Louisiana.
In June, Brown announced that State Farm would rebate $31.5 million to auto policyholders in Louisiana. A few days later, a $19.5 million rate rollback was announced by State Farm. Commissioner Brown cited measures he implemented, such as “no pay, no play”, impoundment and a crackdown on drunk drivers as one of the reasons for the lower auto insurance rates.
Commissioner Brown designated August as Senior Citizen Health Coverage Awareness Month. Governor Foster issued a proclamation at Brown’s request. The Commissioner and his staff took time during the month to explain health insurance options to senior citizens throughout the state.
Also in August, the Washington-based Consumer Federation of America gave Louisiana an A+ rating for being adequately funded to protect consumer around the state. The study by the CFA compared ten years of insurance regulation, from 1988-1998, for all states and came up with the following comparisons for the Louisiana Department of Insurance:
1988 1993 1998
Total Staff 153 224 275
Actuarial Staff 0 3 4
Market Conduct Exams 1 4 56
Complaints 16,560 3,963 4,537
Department Budget (millions) $4.2 $15.4 $25.2
Domestic Insurers 15 180 167
Total Insurers 345 1728 1703
In September, Commissioner Brown urged insurance companies not to raise rates or cancel policies if a consumer had an accident as the result of defective Firestone tires.