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State insurance commissioners favor insurance industry

Written by Diane Archer

A new report from the Center on Public Integrity, Drinks, Dinners, Junkets and Jobs, lays out the tight relationship between state insurance commissioners and the insurance industry and what that means for the people commissioners are supposed to represent. In a nutshell, insurance commissioners are often either former or future insurance industry executives or both. Not surprisingly, as state insurance commissioners, their rulings tend to favor the insurance industry.

Each state has one insurance commissioner responsible for overseeing and regulating insurance rates and complaints against them on behalf of state residents. But, commissioners may want to think about their own interests as well. And, that often means ensuring the insurers do well by them if, down the road, they want a job in the insurance industry. In the last ten years, the Center on Public Integrity found that more than 5o insurance commissioners of the 109 who had left their positions had taken jobs with the insurance industry.

Today, 24 of the 50 insurance commissioners worked for an insurer before assuming their role as commissioner. Some argue that they have the needed expertise. Others argue that the relationship can be too close. Whichever way you cut it, a large number of commissioners are conflicted–hard-pressed to look out for the best interest of consumers.

The Center on Public Integrity scoured thousands of pages of information and surfaced all kinds of conflicts. It found four commissioners with direct financial ties to the insurance industry through stock ownership, a spouse’s job or a retirement plan. Several commissioners received campaign contributions from insurers, even in states where these contributions are prohibited. And many more received expensive trips.

The Center reports that the Arkansas Commissioner socialized many times with lawyers from United Healthcare at the same time as she was deliberating on a case a hospital had filed against United Healthcare. The Center uncovered the thank you note the Arkansas Commissioner emailed: “I had a blast with you Monday night. Thank you so much for entertaining us.’” She subsequently ruled in favor of United Healthcare, saving the company millions. And, then she left her post as commissioner and took a job with United Healthcare.

The Center reports that while 33 or more states prohibit lobbying of former colleagues by former legislators for some amount of time, it does not keep them from taking advantage of their close relationships with the lawmakers and meeting with them. One former regulator claimed she was not lobbying when she asked for meetings since she was not specifically seeking a change in legislation or regulation.

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3 Comments

  • This sounds like a good plan to me. Kind of like having all law enforcement officials come from the ranks of criminals. Who better to understand the criminal mind.

  • Companies can have a “non-compete” clause in their executive contracts that prohibit the employee from taking a position with a competing company when they leave the first company for a set period of time. It seems reasonable that states could have a clause requiring insurance commissioners to wait at least ten years before going into the insurance industry. And..no state commissioner should be allowed to accept campaign funds, gifts, trips or any gratuity from the industry they are supposed to be regulating.

  • I can report that they definitely don’t go the distance to insure (no pun intended) that your contract with your insurer is enforced. I had reported a case against DeltacareUSA where they had alienated all the local providers because they had no in network providers so they just refused to pay for services with the out-of-network providers even though the provider had complied with their requirement of pre-determination. DeltacareUSA still failed to pay leaving the out-of-network provider on the hook for the entire amount which eventually they had to write off. So now there is no in-network or out-of-network providers because they refuse to pay.

    The contract which requires that you do not have to go more than 32 miles had me traveling over 35. Now that might not seem a huge difference but how long until that provider refuses to service people because they don’t get paid and then how far will I have to travel?

    I reported it to the PA State Insurance Department and they got clearance for me to go to a local provider on a 1-time basis. I wrote back to the PA Insurance Department and told them that DeltcareUSA had really played them since I had already had the service performed and it was already paid so DeltacareUSA offered nothing and got away with it at no cost and no future penalties if they fail to provide the required services.

    I also told the PA Insurance Department that they missed out on the point of how the insurer had alienated every provide leaving me in a bad position if an emergency should present its self. I got no reply. So I’m effectively stuck with a contact that barely functions.

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