NU Online News Service, Dec.7, 2:23 p.m. EST
SAN FRANCISCO–Consumer advocates face an institutional bias at the National Association of Insurance Commissioners and other regulatory agencies, according to Birny Birnbaum, executive director of the Center for Economic Justice.
Mr. Birnbaum, a longtime gadfly of the insurance industry, earlier had announced he would not be renewing his application to remain an NAIC-funded consumer representative.
He said insurers have virtually unlimited financial resources to convey their messages to regulators. "Insurers spend tens of millions of policyholder-supplied funds to lobby for insurer interests. In contrast, consumer interests have few such resources," said Mr. Birnbaum.
The problem, he said, does not only exist in insurance, and it is not the fault of regulators, but rather is a structural problem with regulatory agencies in general.
But he added, "The imbalance is on display at the NAIC, where over a thousand industry representatives – many of whom are former insurance regulators – are paid to present and press the industry viewpoint during and between NAIC meetings."
Mr. Birnbaum said there are only a handful of consumer representatives, most of whom are volunteers. "The current consumer participation budget at the NAIC is $120,000 – less than the salary of one industry lobbyist," Mr. Birnbaum said.
Dan Schwarcz, an NAIC funded consumer representative from the University of Minnesota Law School, echoed the concern, and added that while it may seem that consumer interests are well-represented at NAIC meetings, most of the consumer representatives cannot devote a substantial amount of time to pressing their viewpoints outside of the meetings.
He said unlike the insurer lobbyists, the consumer advocates have other jobs, and do not make their money through volunteering time as consumer representatives.
Mr. Birnbaum suggested a number of concepts to strengthen the consumer lobby. One would be to create a Public Insurance Counsel, with 50 cents from each insurance policy sold collected by states to fund such a public or quasi-public agency.
He said states could opt to pass laws establishing consumer organizations that would be authorized to enclose a one-page pamphlet with insurance policies. The pamphlets, Mr. Birnbaum said, would "describe the organization and invite consumers to join for an annual membership." He said the Illinois Consumer Utility Board uses this model.
Another option Mr. Birnbaum discussed would be allowing consumers to choose whether their policyholder funds could be used for insurer lobbying.
"Consumers should be presented with a choice – 'Do you want any part of your premium to go to insurers for government relations, to a publicly-chartered consumer organization for consumer advocacy, or neither?" he said.
Marcy Morrison, Colorado Insurance Commissioner, said she served as a consumer advocate before becoming a regulator, and understands the uphill battle.
But, she said consumer advocates can and should press their cases through legislators, who have clout and greater access to regulators. While acknowledging that directly presenting unpopular consumer viewpoints can be difficult, and make a consumer representative feel "small," she said consumer advocates "do have other options and [need] to use them."
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