Louisiana Insurance Chief’s Huge Task;

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Commissioner Aims to Restore Trust of State’s Battered Citizens;
Glad Only ‘a Tree Fell on Your Roof’


CHALMETTE, LA — Even before Hurricanes Katrina and Rita devastated the state’s Gulf coast, Louisiana Insurance Commissioner Robert Wooley had his work cut out for him: He got the job in 2000 after his boss and political patron was indicted on federal fraud and obstruction charges — the third Louisiana insurance commissioner in a row to land behind bars.

Mr. Wooley, 51 years old, a lawyer and onetime political consultant, says he set out to show consumers it doesn’t have to be so. Now, however, Louisiana residents need not just a capable commissioner, but one up to a Herculean task.

Early estimates put insurance claims from homeowners in the state at $19 billion from Katrina alone. More than half those in flooded New Orleans lack government-sold flood insurance, setting the stage for widespread dispute over insurance payouts — even as the threat looms that some private-sector insurers will cut back the business they do in the state, hurting the rebuilding effort.

Louisiana Insurance Commissioner Robert Wooley surveys damage from a copter above New Orleans.

More immediately, thousands of homeowners can’t even reach their homes to see how bad the storm-related damage is. Insurance adjusters, also slowed down by the logistical problems, can’t cut checks without assessing the damage. Demolition can’t start before insurers adjust claims.

Lodging is another challenge: Mr. Wooley can’t find even a dozen rooms in relatively unscathed Baton Rouge to house volunteers from insurance departments around the country.

Riding last week past blocks of shattered houses here, where lawns are slicked with drying sludge, Mr. Wooley ticked off damage: high-water marks on the roofs of one-story houses; houses tumbled in roadways; decking torn from roof trusses.

“This is a marathon, not a sprint,” Mr. Wooley says. “There are going to be huge obstacles.”

Louisiana’s insurance department has been a butt of jokes for its checkered past, bureaucratic inefficiencies and coziness with the companies it regulates. When Mr. Wooley took the helm, he expected a six-month stint while his predecessor stood trial. Instead, former Commissioner James H. Brown spent six months in jail and Mr. Wooley went on to run for the elected post, winning a four-year term in 2003.

Mr. Brown’s predecessor pleaded guilty to taking bribes, and a federal jury convicted the commissioner before him of hiding campaign contributions from an auto insurer that later collapsed. “Part of the reason I ran for this office is to show people,” Mr. Wooley says. “You can take the politics out of it. And you can walk away from it without going to jail.”

When a state auditor alleged in 2002 that a handful of employees in the insurance department had collected paychecks while at the gym or on personal trips, Mr. Wooley quickly dismissed or suspended the employees.

Mr. Wooley and political consultant Mike Mann in Chalmette, in St. Bernard Parish.

Still, his ties to Mr. Brown — they are former law partners — have opened him to criticism, as have ties to insurance companies.

He accepted $577,000 in campaign contributions from insurers in 2003 and 2004, according to the Foundation for Taxpayer and Consumer rights. Soon after he was elected, he successfully championed a measure letting insurers raise or cut rates by up to 10% without regulatory approval. He deemed it necessary to draw more insurers to the state, and the number was rising before Katrina. Opponents dubbed the measure “the Wooley tax,” predicting, accurately, that rate hikes would outpace declines.

Then there’s the truck flap. In March, Mr. Wooley had the department buy a $40,000 Harley-Davidson model Ford F-250 pickup truck, with heated seats and a six-disc CD changer, to replace the department’s year-old Eddie Bauer edition Ford Expedition he had been driving. Taxpayer protests prompted a new state law letting legislators ban pricey cars for top state officials. Mr. Wooley, who dismissed the fracas as inconsequential in media accounts, gave both vehicles up. Now, he drives a Hummer H2 he paid for himself.

When Katrina struck, Mr. Wooley obtained copies of emergency orders issued by Florida during last year’s hurricane season and began adapting many to Louisiana. He has barred insurers from canceling policies for missed payments, and required health insurers to treat every doctor’s visit as if it were in-network.

Staffing the department’s hotlines seven days a week, he turned a public-hearing room into a walk-in center and cross-trained licensing employees to take consumer calls. He hired 40 evacuees to staff two dozen new phone lines, and a call center to handle extra volume. And he made space for some insurance-company employees, saying the move would help resolve hotline complaints on the spot.

The thorniest complaints likely lie ahead. Property owners in the worst-flooded areas are just beginning to return. Many will learn how underinsured, perhaps uninsured, they are. While standard homeowners’ insurance policies cover hurricane wind damage, most explicitly exclude flood damage. That is left to the National Flood Insurance Program, which generally caps reconstruction claims at $250,000. Mississippi’s attorney general has sued insurers to force them to pay flood claims. Some policyholders have sued Mr. Wooley, demanding he do much the same. He says he will follow the court’s order, letting the state’s attorney general handle the litigation.

Mr. Wooley with St. Bernard Parish officials at temporary headquarters in a refinery.

Asked about the issue aboard a Mississippi River houseboat that serves as temporary headquarters for the sheriff in hard-hit St. Bernard parish, he adds, “If we wait for this lawsuit, we’ll all be sitting here on this barge five years from now.”

His advice to policyholders: Get what they can from insurers and federal aid. “Then when the lawsuit is resolved in five years, hopefully you’ll get something out of that and it’ll be what we call down here lagniappe” — a Louisiana Creole term for something extra.

Right now, his goal is creating “insurance villages” in St. Bernard and Plaquemines parishes — housing, laundry, catering and other basic services for adjusters, federal officials and aid organizations — so policyholders can more easily get their claims under way.

“Even a well-staffed, well-funded state might have trouble with something of this magnitude,” says Robert Hunter, insurance director for the Consumer Federation of America. “I just don’t think they can keep up with complaints without a lot of help from the outside.”

Meantime, other problems loom for Mr. Wooley. Several private-sector insurers aren’t writing new policies in the state as they assess the hurricanes’ cost; some may leave entirely. Those that stay are expected to seek steep rate increases from a state commission, of which Mr. Wooley is one vote. He says failing to approve reasonable increases could drive more insurers out.

Flying back to Baton Rouge after his Chalmette visit, Mr. Wooley watches out the helicopter window. “That person was lucky enough to have a tree fall on his house,” he says, adding: “It’s pretty sad” when the best news “is that a tree fell on your roof.”
Write to Theo Francis at [email protected]

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