Consumer advocates face an institutional bias at the National Association of Insurance Commissioners because they lack the people and money to level the playing field in lobbying regulators, according to Birny Birnbaum, executive director of the Center for Economic Justice.
Mr. Birnbaum, a longtime critic of insurance industry practices, 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. 
However, 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. He added that while it may seem 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 Council, 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 suggested.
Colorado Insurance Commissioner Marcy Morrison said she served as a consumer advocate before becoming a regulator and understands the uphill battle.
However, 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."
Earlier, Mr. Birnbaum said the NAIC should hold fewer non-public meetings and adopt greater transparency and public accountability. Speaking at the Consumer Liaison Meeting, he said consumer advocates in 2007 and 2008 requested that the NAIC conduct itself in a more transparent manner.
"What we had noted was that the NAIC had started using more and more regulator-to-regulator meetings for things that didn't involve discussions of individual companies or anything else that would have sensitive data," according to Mr. Birnbaum.
He added that the discussions were made private "simply to shield the regulator discussions from the public."
As a recent example, Mr. Birnbaum said when life insurers wanted to present their request for capital and surplus relief, the NAIC held a private meeting and then began "a fairly aggressive process" to examine the issue.
Although such concerns had been raised years ago, Mr. Birnbaum said there has been no action to date from the NAIC.
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