Consumer Advocates Challenge NAIC Over Revolving Door On Industry Jobs

A letter from funded consumer representatives at the National Association of Insurance Commissioners rips the organization on the closeness of some state regulators to the industry, including former North Dakota Commissioner Jim Poolman.

In particular, the Sept. 24 letter questions the process surrounding recently adopted revisions to the Viatical Settlements Model Act, and raises concerns about Mr. Poolman's hope to find a job in the insurance industry.

Attachments to the letter also raise concerns about 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, Mr. Poolman assailed the letter and life settlements industry, emphasizing he has not accepted a job in the industry, or had an unwritten or unspoken agreement with a company while he was insurance commissioner. He did say, however, that an announcement would be forthcoming shortly on an appointment to a position.

The letter is signed by 11 NAIC-funded consumer reps, with a copy sent to the Department of Justice Public Integrity unit.

It states that several news accounts regarding Mr. Poolman “have raised questions about the integrity of the process used that resulted in changes to the model.” Later, the letter states that allegations of impropriety “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 in which the NAIC officers, chairs of standing committees and chairs of executive committee working groups agree not to accept any direct or indirect compensation to appear before any legislative or administrative body on any issue under the jurisdiction of their committee for a period of one or two years after they leave the position, with substantial penalties for violating the policy.”

“The NAIC has no response to the letter at this time,” said an NAIC representative, Scott Holeman, noting that a consumer meeting was scheduled for Sept. 29 during the group's fall meeting in Washington. (Check the NU Online News Service at www.propertyandcasualtyinsurancenews.com for an update.)

Attachments to the letter include a Sept. 2, 2007 article from the Associated Press, a blog report North Decoder.com, and a timeline provided by NAIC-funded consumers Bill Newton and Don Morrison.

The AP story reported e-mails it obtained indicate insurance lobbyists and regulators were informed by Mr. Poolman of his impending departure before North Dakota Gov. John Hoeven. The AP article cites laudatory e-mails from Julie McPeak, Kentucky executive director of the office of insurance, who succeeded Mr. Poolman as NAIC's “A” Committee chair, and also worked on and shepherded the viatical model through to its full NAIC adoption.

In one e-mail cited by AP, Ms. McPeak writes: “Congrats on your new gig. You deserve a sweet deal after all you have been through. And a place in N.Y.! How cool is THAT????” Iowa Insurance Commissioner Susan Voss, according to the AP story, jokingly wrote: “Promise me you'll still remember the little…state commissioners when you hit the big time, and only shop at Barneys and Manolo,” referring to expensive clothing stores.

In an article in the Sept. 26 Lexington Herald Leader, e-mail exchanges between Ms. McPeak and Mr. Poolman cited Ms. McPeak as expressing concern over Gov. Ernie Fletcher's chances of being reelected and her interest in obtaining a job in the 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 in Washington.

Jack Dolan, a spokesman for the ACLI, told the paper no one had contacted Mr. Ferguson on that topic. Ms. McPeak told the Herald Leader she would prefer to stay in state government, but because her position is appointed, she could be replaced at any time. She told the paper “she had 'nothing lined up' for a private sector job.”

Ms. McPeak, in an interview with NU, emphasized she does not have a job lined up in the industry, and “very much like my job.” The e-mail, she said, was considered a “joke” between she and Mr. Poolman. A call was never made, she stressed, but noted she is an appointee, the governor is in a “heated race,” and it is “not shocking” to think she would consider other options.

Ms. McPeak said she was “generally surprised at the tone of the [consumer] letter,” because at least some of the consumer reps who signed it supported the model. She said she continues to support the process and added that the model came back to the “A” Committee twice–under Mr. Poolman and under her chairmanship. She also noted there are 12 other commissioners in addition to Mr. Poolman who supported the model and voted for it.

“I don't intend to reopen the model unless there is a groundswell among commissioners,” she said.

In his interview with NU, Mr. Poolman asserted that accounts of a $300,000 job and an apartment in New York as well as allegations of impropriety are “gossip. It is planted by the life settlement companies to discredit me and the good work at the NAIC. If they bloody me up badly, no one will want to introduce it [in legislatures].”

He acknowledged he did accept a $25,000 contribution in 2006 from Sara Bachrach, wife of Ira Brody, a partner with New York-based InsCap., but “in accordance with state law,” adding that Mr. Brody has contributed to a number of candidates nationwide.

He also noted that InsCap is involved in premium financing and not in viatical and life settlements covered under the model.

He said in e-mails he has discussed the issue of Ms. McPeak's tenure and “joked” that he would speak to Bruce Ferguson, although he asserted he has never done so.

Contacted about the consumer letter, Birny Birnbaum, an NAIC-funded consumer rep and executive director of the Center for Economic Justice in Austin, Texas, said “Jim Poolman has done more to help insurance consumers in North Dakota and the NAIC than any other insurance commissioner.”

“I think that he paid a price,” Mr. Birnbaum said, adding that “any commissioner that really sticks his neck out” is subject to negative treatment.

However, he did say a long list of past NAIC presidents–including Ernst Csiszar and Al Iuppa–who have gone to work in the industry, suggests a stronger NAIC policy on working for the industry after regulating it is needed.

Bill Newton, executive director of the Florida Consumer Action Network in Tampa, Fla., said a few states have requirements in place, but having a two-year requirement for all states is not unreasonable. “It gives us comfort that a commissioner is not looking for a job.”

The revolving door is apparent both at the NAIC and in government more generally, he added. “But we want a regulator to be focused on being a regulator, and not to be looking too far ahead,” he said. “We want regulators to be serving consumers, and many of them do.”