Montana Commissioner's Letter To Trial Lawyers Raises Industry Ire

Morrison adds that he has abided by Montana law and has not taken contributions from any corporation. He has also not taken any contribution from a political PAC, he adds. However, he says he may have received contributions from certain agents.

He notes that he will continue to pursue consumer initiatives as well as work for the industry. Morrison notes his efforts to get federal assistance for insurers in the wake of the events of Sept. 11.

Kevin Hennosy, chairman of SpreadtheRisk.org in Kansas City, Mo., and a consumer advocate, says the issue underscores the need to publicly finance campaigns. He notes that Morrison has no regulatory authority over trial lawyers.

Hennosy concurs that fundraising has gone on at quarterly meetings and says the NAIC should adopt a policy statement at its executive and plenary sessions that “bans raising campaign funds at NAIC meetings.

“Commissioners know this kind of thing goes on, it is not good, and know what to do to stop it. They have decided to turn a blind eye to it,” Hennosy says.

Incoming NAIC President Terri Vaughan says she has heard this kind of criticism aired since she became a commissioner in 1994. It is important to note, she says, that commissioners are chosen by their states’ own constitutional processes and if commissioners are perceived as being too tied to the industry, then it is up to individual state governments to address any concerns.

Vaughan adds that when the matter was discussed in 1995, it was decided that it was not appropriate for the NAIC to prevent fundraising because it is a state issue. She says if the issue is raised, she would welcome the opportunity to revisit it.

Insurers, at press time, are planning to express their own concerns in a letter to Vaughan. They note concerns over plans to disclose individual consumer complaints to the public. The letter says that although the industry supports making “complaint ratio” information available, it does not believe customers personal information in complaints should be disclosed.

Insurers proceeded in good faith in working on a database that would provide a level of information to consumers, according to Paul Blume, vice president with the American Insurance Association in Washington. But the letter suggests that the database could become a “roadmap to trial lawyers,” he continues.

He says he is concerned that “litigation could become the regulator of insurance.” Additionally, he notes that revealing private consumer information in complaints would cause difficulty for insurers.

On the issue of fundraising, Blume agrees that insurers and insurance groups do raise money for elected commissioner candidates they support. Attorneys raise money for candidates they support.

“However, I do not recall a time when an insurer or insurance group has used an NAIC policy and/or position as a means of raising money for a commissioner candidate. That is what is troubling about the Morrison letter to ATLA letter.”

Jack Dolan, a spokesman for the American Council of Life Insurers in Washington, says “the ACLI frequently finds itself at odds with the trial bar. Still, it remains to be seen what impact it will have on Mr. Morrison, in his role as the insurance industry’s regulator.”

Roger Schmelzer, vice president-regulatory affairs with the National Association of Mutual Insurance Companies in Indianapolis, says that “the issue is what is going to be done with the database. Is it going to undermine state regulation or help consumers?”

Morrison’s letter underscores concerns that the database be properly used and that individual complaints not be used as a source for trial lawyers to create a plaintiffs’ class.

Among the points that insurers hope to address with regulators, according to Schmelzer, are a company’s right to respond to a complaint and make sure that there is standardization in the information reported.

Reproduced from National Underwriter Life & Health/Financial Services Edition, December 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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