Alabama Insurance Commissioner Walter Bell’s move to a very senior position at a major reinsurer fails the proverbial smell test miserably. So blatant and audacious a disregard for appearance and propriety can only be called shameless. Unfortunately, it is but the latest in a string of shameless moves of insurance commissioners to the ranks of the industry they were charged with regulating.
Yes, my friends, we are back to taking one more turn through the revolving door headquartered in Kansas City, Mo., and otherwise known as the National Association of Insurance Commissioners.
It was announced on August 19 that Bell was leaving the Alabama department to become chairman of Swiss Re America Holding Corp.
Alabama law is pretty clear on situations like this. What it states is: No public official or public employee who personally participates in the direct regulation, audit, or investigation of a private business, corporation, partnership, or individual shall within 2 years of his or her departure from such employment solicit or accept employment with such private business, corporation, partnership, or individual.
You would think this would apply to the commissioner of a department. But no.
So how did Bell get around this seemingly insurmountable obstacle vis ? vis employment with Swiss Re, at least a few of whose units are regulated by Alabama.
Well, it works out serendipitously because you see Bell will not be working for any of those units. He’s going to be working for the holding company.
Thank goodness for that! That loophole obviates what might otherwise seem like a huge conflict of interest, doesn’t it?
We’re following the letter of the law, see. It says so right here.
Never mind that the spirit of the law has been tied up, trussed up and thrown overboard with nary a glance back.
And let’s not forget that this arrangement had to have been carried out while Bell was still the nominal head of the Alabama department that was overseeing some Swiss Re units. But it’s OK since the negotiations were with the holding company.
NAIC-funded consumer reps were right to be outraged over the revolving door at the NAIC. They called on the NAIC “to institute a strong conflict of interest policy which includes a prohibition against lobbying the NAIC or other insurance regulatory bodies…for a period of two years following departure from public service.”
The reps continued, saying, “The movement of regulators to industry feeds the perception that NAIC leadership positions are a stepping stone to future industry employment. Instituting a strong conflict of interest policy with revolving-door safeguards would help erase that image…”
NAIC’s response essentially was a shrug of the shoulders: We have an ethics policy in place, but we can’t enforce it. That’s up to the individual states.
I would actually go further than the consumer reps. Rather than simply having a two-year lobbying ban, I would suggest that the situation calls for a two-year employment ban in the industry.
Yes, I can hear the howls and the squeals. Don’t you know this is America and even insurance regulators have to support their families, pay the bills, put their kids through college? But I say if you are going to go into public service in the first place, it should be to serve the public unreservedly and not as a launching pad for a position where the really big bucks are to be made.
Companies, too, need to understand that they are just as responsible for the revolving door, since they’re the ones that are dangling those big-buck positions.
It’s way past time for some really powerful air freshener in this business.
“Yes, my friends, we are back to taking one more turn through the revolving door headquartered in Kansas City, Mo., and otherwise known as the National Association of Insurance Commissioners.”