Wham! Bam! Thank You…
Being a trade association guy and former low-level press secretary on Capitol Hill, I understand well the concept of spin.
Some of the biggest troubles I’ve had in my career were when I publicly committed a “gaffe,” the technical definition of which means “to inadvertently speak the truth.”
Still, it’s hard not to giggle a little bit at the official website coverage of the National Association of Insurance Commissioner’s December meeting in Washington.
Aside from promoting the election of a new slate of officers, the website offers banal press releases on a couple of international items, promotes a new report on the state of homeowners insurance and touts a recent meeting between NAIC leaders and Treasury Secretary Jack Lew. From association CEO Ben Nelson: “The meeting successfully builds on the strong working relationship state insurance regulators have with their federal counterparts, and the NAIC looks forward to a continued dialogue on issues of mutual interest with the Treasury Department that strengthens our state-based system of regulation.”
I think former Senator Nelson was the best possible choice for the job, and I’m glad he’s doing everything he can to put a happy face on the strained relations between state regulators and the federal government on issues ranging from Obamacare implementation to the recent release of the Federal Insurance Office’s assessment of the quality of state-by-state regulation.
But the real news of the NAIC gathering isn’t found on the official website. It’s the stink-bomb that Connecticut insurance commissioner Tom Leonardi released in a letter to his colleagues. Leonardi is well known as a fierce and sometimes angry critic of FIO director Mike McRaith, himself a former NAIC officer and Illinois insurance director. But Leonardi showed that he could dish it out to his colleagues just as much as to the feds.
Let’s hear it from him:
“If the companies we regulate had the same governance issues we have here at the NAIC, we would be outraged and heads would roll.”
On the “imperial presidency” cult (hmm…former NAIC president Kevin McCarty?): “Everyone seems to accept the unwritten rule that most decisions are at the discretion of one person. Not only is this an abysmal governance practice, but since every year brings a new president, the organization predictably lurches from one administration to another.”
On the elections of officers: “They most closely resemble those we experienced in junior high school…Yet somehow some seem to believe that, once elected, they become more experienced, articulate and wiser than they were the day before the election.”
On the “cronyism” argument: “The undue influence of two former commissioners continues to undermine the independence of this organization to its detriment. Our previous CEO (Terri Vaughan) was a victim of this cabal. We went out and hired a world-class CEO in Nelson, yet the cabal is now attempting to undermine him.” (Hmmm again. McRaith? Former North Dakota commissioner Jim Poolman?)
On the decision of several commissioners to decline a meeting with President Obama on the Affordable Care Act rollout: “At a time when our national state-based system of regulation is under perhaps its most critical set of threats and challenges at home and abroad…the recent decision by some of our leadership to decline an invitation to meet with the president of the United States on critical insurance matters was bad enough.
But to immediately provide a copy to the national press of a misguided and irresponsible letter criticizing the decision to accept President Obama’s invitation makes clear that, in spite of these external threats, the biggest challenge we face is the dysfunction in our own organization…If we cannot fix these governance issues, then others, including industry and the federal government, would be right to question whether we are up to the task of regulating the largest insurance market in the world.”
The theme of Leonardi’s letter, unsurprisingly, was, “We have met the enemy and he is us!”
The decibels created by Leonardi’s missive might have eclipsed the buzz from the previous week’s release of the much-anticipated (and two-years-in-the-making) FIO report titled “How to Modernize and Improve the System of Insurance Regulation in the United States.”
The report, mandated under the Dodd-Frank Act, makes recommendations in the areas of insurance sector solvency and marketplace regulation. The recommendations propose near-term reforms that states should undertake regarding capital adequacy, safety and soundness, and the reform of insurer resolution practices. The report also outlines areas for federal involvement in insurance regulation. With the possible exception of recommendations on homeowners insurance that worry us, we at The Council think the report is terrific.
Boring, right? The report is so thoughtful and inherently correct about the need for modernization that it’s hard to argue with it. But Leonardi certainly does, especially when he challenges McRaith’s participation in international insurance regulatory negotiations. In one head-scratching interview with a trade rag in 2013, Leonardi basically argued that McRaith speaks on behalf of federal employees only (never mind the federal statute requiring his advocacy for the industry in global talks).
But, hey, who’s to quibble? Leonardi made the meeting of the NAIC (historically tagged as standing for “No Action Is Contemplated”) seem like the Ultimate Fighting Network.
Oh, and the official news: North Dakota Insurance Commissioner Adam Hamm was elected president of the NAIC for 2014. Hamm seems to be a good guy. If he can placate Leonardi and get the commissioners to sing off the same song sheet, he will have chalked up a monumental achievement.
One insurance trade reporter suggested the headline then would be “Wham Bam Thank You Hamm!” Don’t hold your breath waiting to see that one on the NAIC website.