Big Turnover Seen In The Ranks Of State Insurance Commissioners

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The face of insurance regulation looks very different following the elections on Nov. 5.

Depending on whom you ask, that face is more “public-interest oriented” or “liberal,” according to some interviews with National Underwriter.

So, while current work on modernizing insurance regulation, ensuring consumer privacy and other significant issues is likely to continue, how they are perceived and handled could change, these sources say.

And, according to one consumer advocate, Kevin Hennosy, SpreadtheRisk.org, Kansas City, Mo., the new group of insurance commissioners could offer a voting block that will be more supportive of consumer issues.

A total of 36 gubernatorial elections were held and as of Nov. 6, at least 23 new governors elected, according to the National Governors Association, Washington.

Four contests for elected insurance commissioners were held.

Perhaps the race for governor most closely watched by insurers was in Kansas where Democrat Kathleen Sebelius, insurance commissioner and former president of the National Association of Insurance Commissioners, handily won against her Republican opponent, Republican State Treasurer Tim Shallenburger by a margin of 53% to 45%.

The four races for elected insurance commissioners produced one new face, reelection of two incumbents and a former commissioner who resurfaced after seven years away from insurance regulation.

The new face, Sandy Praeger, a Kansas Republican, will fill the spot being vacated by Sebelius. In Georgia, John Oxendine, a Republican, was reelected for a third term while Carroll Fisher, a Democrat from Oklahoma won a second term.

In California, John Garamendi, a Democrat, beat his Republican opponent, Gary Mendoza.

California is a state that is closely monitored by insurers because its legislature is addressing critical life and property-casualty issues that include long-term care oversight, privacy protections and workers compensation reform.

Garamendi has expressed an interest in working with insurers and starting anew, according to representatives from the American Insurance Association, Washington, and the National Association of Independent Insurers, Des Plaines, Ill.

In his last term in office, his implementation of Proposition 103, a ballot initiative which ordered insurers to give auto premium rebates to policyholders, created tensions between Garamendi and insurers, sources say.

Californias legislature is going to continue to present challenges to many business interests in the state, according to industry trade groups.

Moderate Democrats will not be as strong a presence going forward, and a more liberal presence could act very quickly to pass privacy legislation in California, says Bruce Ferguson, vice president-state relations, with the American Council of Life Insurers, Washington. In fact, the California legislature could try to put privacy legislation in place earlier than any action by Congress, so that it could set standards, he adds.

Illinois is another state where there could be “pent up demand for additional insurance regulation,” as John Lobert, senior vice president-state government affairs with the Alliance of American Insurers in Downers Grove, Ill., put it.

A Democratic sweep over a longstanding Republican controlled legislature, as well as a new Democratic governor, Rod Blagojevich, and attorney general, will create a different political climate in Illinois and could result in the appointment of a new insurance director to replace Nat Shapo, a Republican, according to interviews.

Such an appointment, interviews suggest, would create a hole in NAIC leadership since Shapo is slated to assume the position of vice president, the groups second-highest post.

However, the reelection of Arksansas Governor Mike Huckabee, ensures that Mike Pickens, Arkansas insurance commissioner, will become NAIC president during the winter meeting in San Diego next month.

In addition to Illinois, 14 other states elected new candidates to attorney general posts, a position that insurers are careful to monitor given suits about such issues as sales practices that have been brought against the industry in the past by attorneys general.

And, in Florida, a newly created post of chief financial officer won by Tom Gallagher, the current insurance commissioner, will leave the top insurance regulatory spot vacant. Gallagher and reelected Governor Jeb Bush will make an appointment to the post.

In Texas, the impact of Nov. 5 was felt by Rep. David Counts, D-Knox City, former president of the National Conference of Insurance Legislators and chair of the insurance task force of the National Conference of State Legislatures, Denver, who was not reelected.

Counts has been an NCOIL member since 1988, and the loss of that experience on insurance matters will be felt, says Robert Mackin, executive director of NCOIL, Albany, N.Y.

Other governorships in which a new party will be represented include Maryland, Michigan, Pennsylvania and Vermont.

Interviews suggest that while there could be a change in Pennsylvania, the commissioner posts in Maryland and Michigan are set by established terms in office.

In Vermont, if State Treasurer James Douglass is named the new governor-elect by the legislature, he would probably not move to overturn a privacy regulation designed to meet requirements of the Gramm-Leach-Bliley Act of 1999 because it is being litigated, says Jerry Zimmerman, senior counsel with the NAII.

And, in Oregon, voters defeated Measure 23, a ballot initiative that would have created a Canadian type of universal health care system for state residents. The defeat was applauded by the Health Insurance Association of America, Washington.

That initiative, according to Ron Panneton, associate general counsel with the National Association of Insurance and Financial Advisors, Falls Church, Va., was opposed by NAIFA members in Oregon.

The large turnover in regulatory ranks can be viewed as an “opportunity to make the sale again,” according to Panneton. NAIC committees will have “new people, new thoughts and new directions from commissioners,” he added.


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 11, 2002. Copyright 2002 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.