[Washington] — The National Association of Insurance Commissioners (NAIC) Executive Committee meeting erupted into a biting referendum on the NAIC itself Monday, with Connecticut Insurance Commissioner Tom Leonardi motioning to hire an outside firm to conduct a corporate governance review. Leonardi would like the review to address a variety of so-called poor decisions, some by an “Imperial Presidency.”
The motion was rejected by the Executive Committee, and debate was shut down to the full body after many commissioners said a corporate governance review might well be needed, but the proposal should be vetted by the Corporate Governance Committee first.
Leonardi acted after sending a letter to commissioners accusing the NAIC of embarrassing and treacherous governance issues, such as being throttled by a small cabal of members, and of being its own worst enemy through its clumsy, one-sided and fraught process of decision-making.
The Dec. 11 letter alleged that one of the most egregious examples by the Executive Committee was the decision by last year’s president, Kevin McCarty of Florida, “to give the Federal Insurance Office (FIO) one of the NAIC’s three seats on the IAIS Executive Committee.”
The Leonardi letter took to task the leadership schisms and factions that have been well-publicized in recent weeks, such as some commissioners’ decision to turn down an invitation to a meeting with President Obama. The decision was seen by those in certain political circles as a colossal snub.
Indeed, Leonardi and other commissioners have spoken strongly about the whole affair, saying turning down a sitting president is appalling and makes the NAIC looked doomed if it wasn’t before.
Washington Commissioner Mike Kreidler is quoted in the letter as stating that, “This could be so bad that it might be the pivotal point we later recognize that doomed state based regulation. Talk about a self-inflicted wound!”
“If we cannot fix these governance issues, then others, including industry and the Federal Government, would be right to question whether we are up to the task of regulating the largest insurance market in the world,” Leonardi stated in his letter.
He also accused the NAIC leadership of cronyism, and being under the “undue influence of two former (unnamed) commissioners,” who continue to undermine the organization, and who are now after CEO Sen. Ben Nelson.
Other commissioners interviewed said that they support efforts to hire an outside consultant if needed, but want to take advantage of the process in place to have the Corporate Governance Working Group look at it and discuss during the Commissioners’ retreat in Arizona in early February.
New York Superintendent Ben Lawsky was the only state regulator who seconded Leonardi’s motion before non-Executive Committee members were prevented from speaking by a point of order. Later, commissioners from California and Illinois expressed disappointment that they could not air their views on corporate governance.
“I am astounded” that they are not giving us an opportunity to speak on “an issue of this importance at the NAIC,” said California Insurance Commissioner Dave Jones.
New York is concerned that if the proposal did not go through, the outside consultant might never see the light of day — that it could be lost in committee.