Consumers Tell Justice Dept. NAIC Has Conflict

Consumer representatives have written the National Association of Insurance Commissioners and U.S. Justice Department suggesting the closeness of some commissioners with insurers may conflict with their regulatory activity.

The letter cited the actions of North Dakota Commissioner Jim Poolman and Julie McPeak, Kentucky executive director of the office of insurance, in the shaping of legislation regulating insurers. Mr. Poolman, a Republican, resigned and left his elective post Sept. 1.

In particular, the letter, signed on Sept. 24, questioned the process surrounding the recently adopted revisions to the Viatical Settlements model act that include company disclosure and marketing issues, and raised concerns about Mr. Poolman's hope to find a job in the insurance industry.

Attachments to the letter also raised issues concerning campaign contributions to Mr. Poolman during the time he was overseeing the development of the revised model at the NAIC's Life & Annuities "A" Committee.

Reached by National Underwriter at his home, Mr. Poolman said he has not accepted a job in the industry or had an unwritten or unspoken agreement with a company in the industry while he was insurance commissioner.

Signing the letter were 11 consumer groups that the NAIC recognizes by providing funding for representatives of those organizations to attend its meetings throughout the country.

In addition to mailing the NAIC, the groups mailed a copy of their letter to the Department of Justice Public Integrity unit.

The letter stated that news accounts regarding Mr. Poolman "raise real concerns about the integrity of the process used to update the viatical model act."

The letter calls on the NAIC to adopt a conflict of interest policy which would levy substantial penalties on commissioners who received compensation to lobby legislative or administrative bodies for one to two years after leaving office.

The NAIC declined immediate comment.

Attachments to the letter include a Sept. 2 article from Associated Press. The AP article cites laudatory e-mails from Julie McPeak, Kentucky executive director of the office of insurance. Ms. McPeak succeeded Mr. Poolman as "A" Committee chair and also worked on and shepherded the viatical model through to its full NAIC adoption.

In an article in the Sept. 26 Lexington Herald Leader in Lexington, Ky., e-mail exchanges between Ms. McPeak and Mr. Poolman cite Ms. McPeak as expressing concern over Kentucky Gov. Ernie Fletcher's chances of being re-elected and her interest in obtaining a job in the insurance industry.

In the e-mail, according to the article, Mr. Poolman, then commissioner, offered to contact Bruce Ferguson, a lobbyist with the American Council of Life Insurers, Washington.

Jack Dolan, a spokesman for the ACLI, said that no one had contacted Mr. Ferguson on that topic.

Ms. McPeak, in an interview with National Underwriter, emphasized she does not have a job lined up in the industry and "very much like my job." The e-mail to Mr. Poolman, she said, was considered a "joke" between them. Mr. Poolman agreed. They both said a call to Mr. Ferguson was never made. Ms. McPeak noted that she is an appointee, the governor is in a "heated race," and it is "not shocking" to think that she would consider other options.

Mr. Poolman when interviewed asserted that accounts of a $300,000 job and an apartment in New York as well as accounts of impropriety are "gossip" that is "planted by the life settlement companies to discredit me and the good work at the NAIC." He added, "If they bloody me up badly, no one will want to introduce it [in legislatures]."

He acknowledged that he did accept a $25,000 contribution from Sara Bachrach, wife of Ira Brody, a partner with InsCap, New York, in 2006.

He said the contribution was "in accordance with state law" and that Mr. Brody has contributed to a number of candidates nationwide. Mr. Poolman also noted that InsCap is involved in premium financing, and not in viatical and life settlements covered under the model.

Life settlement representatives and some representatives of life insurance financing have disagreed, stating that InsCap uses trusts to participate in the industry.

Contacted about the consumer letter, Birny Birnbaum, an NAIC-funded consumer rep and executive director of the Center for Economic Justice, Austin, Texas, said that Mr. Poolman has done a lot for consumers, but a stronger NAIC policy is needed.