I’m really sorry to hear that Eric Dinallo will be calling it a day as New York’s insurance superintendent on July 3. He was a fair and effective regulator in the most trying of times, as well as press-friendly–always a plus in my book. But more importantly, he also displayed the rarest trait you will ever see in a politician these days–he was always reasonable.
Unlike the governor who appointed him, Eliot Spitzer, Mr. Dinallo was never a grand stander. He wasn’t looking for publicity every time he took action, nor did he play to the peanut gallery when he spoke. He just did his job–and a tough one it turned out to be, especially when Gov. Spitzer, his political mentor, resigned in a sex scandal, and when American International Group nearly went belly-up.
In case you forgot all that Mr. Dinallo accomplished during his relatively brief time in office, check out his record:
–He was a key player at the table, along with then-Gov. Spitzer, in convincing seven carriers to end six years of acrimonious litigation and pay some $2 billion to settle all remaining claims from the World Trade Center’s developer.
–He helped formulate and push through a long overdue workers’ comp reform measure that was hailed by insurers and employers alike–no surprise, being that Mr. Dinallo was able to authorize a 20.5 percent rate cut, despite raising injured worker benefits for the first time in over a decade.
–He also was very influential in leading the way towards reform of the reinsurance collateral system, helping drive NAIC action by moving to unilaterally do away with the standard 100 percent of liabilities collateral requirement imposed on foreign reinsurers, and replacing it with a sliding scale based on a carrier’s capitalization and standing.
–Meanwhile, even though his old boss, Mr. Spitzer, made a name for himself in part by exposing shameless bid-rigging and contingency fee abuse by major brokers and carriers, Mr. Dinallo did not rush to judgment on the entire producer community. His efforts to encourage disclosure of agent and broker compensation has been rational and open-minded.
–Despite being a state regulator, he did not dismiss the notion of federal oversight out of hand. Instead of a knee-jerk reaction, he offered a thoughtful critique of the insurance regulatory system.
Yes, he reminded everyone repeatedly that state oversight was not to blame for the debacle at AIG (which was undermined by its unregulated Financial Products unit, while its state-supervised insurance subsidiaries remained sound and fire-walled off from the rest of the organization’s toxic holdings).
But while he conceded that a national systemic regulator might be needed, he warned strongly against any “optional” federal chartering, arguing that giving players the choice of referee would eventually ruin the game for all.
I certainly cannot blame Mr. Dinallo for taking a hike. With AIG likely to be a punching bag for federal lawmakers for years to come, and after Congress took their best shots at him earlier this year, you can see that his already difficult job might become impossible before long.
Besides, Mr. Dinallo is destined for bigger and better things. Frankly, I don’t expect him to stick around for long as Henry Kaufman Visiting Professor of Finance at New York University’s Stern School of Business.
Indeed, once Attorney General Andrew Cuomo officially starts his primary campaign for governor next year to unseat Mr. Spitzer’s beleaguered replacement, David Paterson, the road will be cleared for Mr. Dinallo to run for the high-profile AG spot.
He already has my vote. How about you?