Insurance Commissioner Jim Donelon won’t seek re-election | Business News

Amid a historic crisis in Louisiana’s property insurance marketplace, Insurance Commissioner Jim Donelon said Tuesday morning that he will not seek re-election to a fifth full term this fall.

The surprise announcement comes as Donelon, a Republican from Metairie, attempts to sort out a near-collapse of Louisiana’s property insurance market. Since 2020’s Hurricane Laura, a dozen insurers writing business in the state have failed, and more than a dozen others have stopped writing business.

The result has been that the number of policyholders covered by Louisiana Citizens Property Insurance Corp., the state’s insurer of last resort, has more than tripled.

In hopes of reducing Citizens’ rolls, Donelon has revived a plan he implemented after Hurricane Katrina to offer state grants to incentivize insurance companies to begin writing business in the state. He was updating the public on that plan when he announced his impending retirement Tuesday.

Donelon said his age and the demands of responding to the insurance crisis in anticipation of the upcoming session were the two factors in his decision not to run.

At 78, Donelon is the longest-serving commissioner to hold the position that has been tainted by scandal; three of his predecessors were convicted and served time in federal prison.

“One thing that did play a factor is a state campaign takes a lot of time, and I haven’t had any time since late last year to put toward my re-election effort,” Donelon said Tuesday.

Donelon said he last held a fundraiser before the holidays in Baton Rouge.

“And since then I haven’t been able to lift a finger toward my re-election campaign because of the time that this crisis has demanded of me and my staff,” he said.

After Gov. John Bel Edwards convened a special session in February, the Legislature agreed — at Donelon’s request — to renew the incentive grant program, providing up to $45 million that would go to companies that write new insurance policies here.

Donelon’s announcement will likely drum up additional interest in the race for insurance commissioner — which, though often a sleepy affair, was bound to attract more voter attention this year because of the grim state of Louisiana’s insurance marketplace.

So far, only one candidate has announced a challenge to Donelon: Tim Temple, a Baton Rouge Republican who ran against Donelon four years ago. In that race, Temple, an insurance executive, spent $2 million of his own money and finished with 47% of the vote.

State Sen. Kirk Talbot, R-River Ridge, who has supported Donelon’s incentive program as chair of the Senate Insurance Committee, said he is not interested in running to replace him. Talbot said in an interview Tuesday that he’s seeking reelection for his seat in the senate.

Donelon’s exit will end a political career that spanned five decades. It was marked by periodic upsets as he sought to become a district attorney, lieutenant governor and congressman.

He entered politics as executive counsel in the administration of former Gov. Edwin Edwards until 1975 when he was elected to the Jefferson Parish Council, where he served for four years.

In 1982, Donelon won a special election to the state House where he served for nearly two decades. His rise to become the state’s top insurance regulator came in the aftermath of another crisis: Hurricane Katrina.

Donelon often talks about the extraordinary effort it took to pull the state’s property insurance market back from the brink after the costliest disaster in U.S. history. With the support of former Gov. Kathleen Blanco, Donelon convinced Wall Street bankers to loan the state’s public insurer nearly $1 billion dollars to pay claims. Taxpayers will be paying that debt off until 2026.

Donelon credited the insurance incentive program rolled out after Katrina with helping to resuscitate interest in the state’s market. Following a playbook deployed in Florida, Donelon encouraged a number of regional insurers that primarily operate in the Southeast to come to the state. For a time, insurance rates fell because of the increased competition.

But the relative calm was short-lived. The four hurricanes that made landfall in the state in 2020 and 2021 thrust the insurance market into another crisis and revealed shortcomings in Donelon’s oversight of the industry.

Over more than a decade, the state-operated a takeout program that allowed insurance companies to assume risky policies held by Citizens. Many of the insurers that took the most policies over a 13-year period did not have the minimum rating required by state law but were allowed to participate anyhow. Four of the companies that took on the most policies wound up collapsing.

Donelon has blamed the managers of the failed insurance companies for not buying enough reinsurance to backstop any catastrophic losses. But the insurance department, under his leadership, did not detect those problems until it was too late.

In announcing his decision, Donelon seemed to acknowledge that his record was likely to make him a target in the upcoming regular session of the Legislature, which begins April 10.

“I really thought I could make a contribution by stepping out of the political arena,” Donelon said, “as we go into the legislative session where there will be debate and disagreement on many of the vital issues that are necessary to improve our market on a go-forward basis.”

Staff writer Tyler Bridges contributed to this report.