Donelon won't approve $50K raise for Citizens CEO - FOX 8, WVUE, fox8live.com, weather, app, news, saints

Donelon won't approve $50K raise for Citizens CEO

MELINDA DESLATTE
Associated Press

BATON ROUGE, La. (AP) - Insurance Commissioner Jim Donelon rejected a $50,000 pay raise Friday for the top executive of Louisiana's state-run property insurance company.

Donelon called it the wrong time for a salary hike even as he praised the work of Richard Robertson, CEO of the Louisiana Citizens Property Insurance Corp.

"The timing, though the CEO has done an exemplary job, is just not right," Donelon said.

Citizens' board of directors backed the pay bump Thursday that would increase Robertson's annual pay from $240,000 to $290,000. But it required Donelon's approval to take effect.

Critics of the raise called it inappropriate when the company is $56 million short of the cash it needs to cover expenses, when state employees haven't had general raises for several years and after the insurance company has enacted rate hikes on many of its customers.

"Our CEO is a good man and has been doing the best he can to keep this company afloat, so this is not a personal criticism of him," Treasurer John Kennedy said. "It's just that the timing and circumstances of this vote are horrible in light of the serious financial straits the company is in."

Approval of the salary boost came at the end of the Citizens' board meeting Thursday though the item hadn't originally been listed on the board agenda. The discussion followed board notification that the state-run insurance company has a $56 million deficit.

Donelon, who wasn't at the board meeting, said he heard concerns from several lawmakers who are on the panel but weren't there Thursday when the pay raise vote was taken.

Sen. Dan "Blade" Morrish, chairman of the Senate Insurance Committee, said he wasn't at the Citizens' board meeting because he attended a higher education budget hearing. He said the mood of the Legislature has been against giving pay raises because of the state's ongoing tight finances.

"Dick Robertson is a good manager. He's an excellent executive. He has done a good job at Citizens. He's first class. This doesn't have anything to do with his performance," Morrish said.

But he noted a series of rate increases on wind and hail policies that raised rates by as much as 200 percent and on commercial coverage by more than 45 percent statewide.

"How do you have those kinds of rate increases and justify a raise?" Morrish said. "If he was making $50,000, I'd say it was justified. But he's not. He's making $240,000."

The company provides property insurance mostly to coastal Louisiana homeowners and businesses that can't get insurance through the private market.

Citizens' chief financial officer, Steve Cottrell, said the company is in the red after it covers claims for Hurricane Isaac and settles class-action lawsuits for improper handling of past storm claims after hurricanes Katrina and Rita.

No decision has been made about how to close the deficit, but it could cost insurance customers around the state.

Among the options available to Citizens: charging an assessment on private insurance companies in Louisiana for each property policy. The private insurers would pass that cost on to customers. Another possibility could involve borrowing money through a bond sale.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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