Bell Tolls For Conflict Policy, NAIC Told

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 charged in a letter to insurance regulators.

The complaint to the National Association of Insurance Commissioners from 14 consumer groups expressed dismay over the "revolving door" between the insurance industry and those supervising it.

Mr. Bell, in addition to being Alabama commissioner, was last year's NAIC president. Starting Sept. 2, his job will be primarily to direct regulatory affairs and lobby regulators for Swiss Re as chairman of Swiss Re America Holding Corp.

The consumer groups' letter, sent to all insurance commissioners, criticized the continued movement of state regulators--including several NAIC past presidents and 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 [International Association of Insurance Supervisors]--for a period of two years following departure from public service." (Until his latest move, Mr. Bell was also vice chairman of the IAIS in Basel, Switzerland.)

The letter also requested that 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 on to industry positions--including Al Iuppa (former Maine director, who left to take a job with Zurich) and Ernie Csiszar (who left to become president of the Property Casualty Insurers Association of America).

"The movement of regulators to industry feeds the perception that NAIC leadership positions are a stepping stone to future industry employment," the letter said. "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, an NAIC-funded consumer representative and executive director with the Center for Economic Justice in Austin, Texas, told National Underwriter 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 the NAIC has made in testimony before Congress advocating a continued role of state insurance regulation, he noted, adding that 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 the 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.

Alabama Insurance Department General Counsel Reyn Norman said Mr. Bell would not be able to advocate on behalf of Swiss Re before the department for two years. He said that as insurance commissioner, Mr. Bell did not "directly regulate" the insurer.

Indeed, Mr. Bell said he is not being employed by the entity regulated by Alabama but rather by its holding company. He said he will not be dealing with the Alabama Legislature or regulators, and will be relocating to New York.

When asked about joining Swiss Re, which supports an optional federal charter, after presiding over the NAIC, which opposes an OFC, Mr. Bell said he will be looking at Swiss Re's positions when he assumes his job. A Swiss Re representative, Alayna Tagariello, said it is premature to discuss any potential review or change in policies.

Mr. Bell, who has been Alabama's commissioner since 2003, last June became the first international director of the Bermuda Monetary Authority. He sat on the NAIC Executive Committee and chaired the NAIC International Insurance Relations Committee.

Before Mr. Bell joined the Alabama department, he was an executive at the MONY Group Inc., a life insurance firm in New York, which merged with AXA Financial Inc. a year after he left the firm.