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Regulation and Compliance > State Regulation

Tips For New Regulators

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With a slew of rookies stepping up to the plate to take a swing at being state insurance regulators this year, it seems like a good time to shout some encouragementand catcallsfrom the bleachers.

Perhaps, before they grow accustomed to the crowds roar (or booing), they might actually listen to the tongue-in-cheek musings of someone who has been in the press box for a long time, covering regulator quirks and foibles.

A regulators job is not an easy taskso little time, so many competing interests. If they are elected, this is their opportunity to make many voters happy and many insurers displeased. It requires some careful footwork. Smack the carriers around too much and they will threaten to leave the ballpark and send rates up. That wont please the “fans”your electorate.

If you are appointed, you may experience the clout of those carriers that are among your states largest employers. They may also be big contributors to the governor who appointed you.

Insurers must always be approached with caution, especially if you are a small state and they are a big companycarriers can embroil your moves in budget-busting litigation. And if you came from the industry and plan on rejoining that side sometime in the future, you might consider that carriers will watch to see how you play ball.

Using the job for sketchy “charity” operations or fibbing to the FBI will get you banned from the sport altogether. However, censoring documents revealing an insurance executives felony record (as once happened in New York) will make points with his company.

Consumer activists can pose a small problem. Many are skilled at generating nasty headlines and manipulating the press. In general, they can be dealt with easily. Whatever their complaint, say you will examine it. If the noise persists, hold a hearing. If the outcry continues, hold another hearing. People will get bored reading about it and the press will get tired writing about it. Wait until something else is big in the headlines and make your move. In a pinch, appoint a committee to investigate.

As a member of the National Association of Insurance Commissioners, you can apply many of these same “careful study” techniques, although lately some NAIC members have expressed fear that this sort of activity might incite Congress to move onto their turf. Nonsense! If the Feds start running things, you will have that much less to doand when slipups occur, you can say its their error.

You cannot expect everything to go smoothly. Remember, in your ballpark unimagined catastrophes (natural and man-made) are frequent and can cause insurers to seek rate hikes because they didnt properly underwrite some unforeseen exposure. You might be tempted to say “tough noogies” when these requests arrive, but remember, if these folks cant meet their bills and go broke, youll be out of a job.

Just when you think the market is acting properly, with insurers restraining themselves from the dog-eat-dog competition that sends some into bankruptcy, a pesky prosecutor might come along and find a carrier involved with scandalous treatment of customers right in your backyard.

Finally, there is the telephone etiquette question. When New York Attorney General Eliot Spitzer calls, answer quickly, “Yes, sirYes, sir, happy to cooperate! What can we work on together?” When a mega-insurer CEO calls, say the same thing. Remember, its all about serving your public.

Daniel Hays

Mr. Hays is a senior editor of NUs Property & Casualty edition.

Reproduced from National Underwriter Edition, February 25, 2005. Copyright 2005 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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