Consumers Urge NAIC Conflict Policy, Citing Bell And Swiss Re

News that Alabama Insurance Commissioner Walter Bell is taking a post with a giant reinsurer raises questions of influence and undermines public confidence, consumer representatives said in a letter to insurance regulators.

The complaint to the National Association of Insurance Commissioners, Kansas City, Mo., from 14 consumer groups expressed dismay over the "revolving door" between the insurance industry and those who supervise it.

Mr. Bell, in addition to being Alabama commissioner, was last year's NAIC president. Swiss Re said Tuesday he will be the new chairman of Swiss Re America Holding Corp., providing "state and federal legislators, regulators and others with the insights they need for effective policy-making,"

Besides directing regulatory affairs and lobbying regulators, the company said Mr. Bell, whose appointment is effective Sept. 2, will provide supervisory governance of the Americas businesses.

The consumer groups' letter sent to all commissioners today criticized the continued movement of NAIC commissioners, including several recent past presidents, and NAIC committee heads to positions with companies they had previously regulated.

The letter 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--including foreign insurance regulators and the IAIS [International Association of Insurance Supervisors]--for a period of two years following departure from public service.

"We also ask that the NAIC specifically adopt a resolution asking Mr. Bell not to lobby the NAIC, the IAIS or foreign regulators for a period of two years from his departure."

The letter cited previous NAIC presidents who have gone to industry positions including Al Iuppa, former Maine director, who left to take a job with Zurich, and Ernie Csiszar, who left to take a job with the Property Casualty Insurers Association of America, Des Plaines, Ill.

The letter continued, "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 and strengthen state regulation of the insurance industry."

Birny Birnbaum, a funded consumer rep and executive director with the Center for Economic Justice, Austin, Texas, said in an interview that the movement of commissioners to industry jobs provided by companies they regulate undermines the argument that state regulators are truly looking after consumer interests.

This argument is one of the points that NAIC has made in testimony before Congress advocating a continued role of state insurance regulation.

And, he added, even before a job is lined up, it calls into question actions of state regulators who may be viewed as burnishing their images so they will be employable by industry when they leave state insurance regulation.

For instance, he cited the willingness of regulators to accept arguments for delaying a market conduct analysis project and market conduct annual statements because of supposed confidentiality concerns.