Insurance chief up against Louisiana's past

NEW ORLEANS -- James Donelon has a lot of persuading to do.

As Louisiana's insurance commissioner, Donelon needs to persuade insurance companies that they should insure homes in his hurricane-prone state. He needs to persuade consumers that their sky-high premiums may soon descend. And, even though he hasn't been implicated in any wrongdoing, he needs to convince people that he's not a crook.

Three of the past four commissioners went to prison on federal criminal charges, including money laundering and extortion. That's a streak Donelon vows to snap.

"Louisiana has a history that has not served us well," says Donelon, 63, who was elected to the post last year. "It's part of our ugly past. We are working aggressively to change that reality."

Cases of former insurance commissioners sent to prison include:

•In 2001, Jim Brown was sentenced to six months in prison for lying to an FBI agent about a bribery case involving his office. He was acquitted of the more serious bribery charges.

•Sherman Bernard in 1993 admitted to extorting $80,000 from insurance companies in exchange for licenses to sell insurance. He was sentenced to 41 months in federal prison.

•Doug Green was sentenced to 25 years in prison in 1991 for trading regulatory favors for campaign contributions. He was released in 2003.

Despite the office's disreputable past, Louisiana's insurance commissioner today has become one of the most important roles in post-Hurricane Katrina recovery. Katrina and Rita caused about $100 billion in damages to the state, creating the worst natural catastrophe in U.S. history.

Seeking more coverage

After Katrina, insurance premiums doubled or tripled, and many returning residents were unable to get new policies for new homes.

Donelon has a tough role: enticing new insurance companies to sign on policyholders, while guarding the rights of those already insured. Last month, Donelon fined Allstate, the state's second-largest insurer, $250,000 for dropping several hundred customers despite a key consumer-protection law. It was the first post-Katrina fine of an insurance company and the maximum allowed by state law.