Insurance Regulators Usually Come From Within The Insurance Industry
In a recent article in the Kansas City Star, the author found that Insurance Regulators and Insurance executives routinely trade jobs through a "revolving door." In an informal nationwide survey conducted by the newspaper, One-third of the new insurance commissioners came from the insurance field. Moreover, more than half of the 35 insurance commissioners who left their jobs in the last three years procured new jobs with the insurance industry or groups that work for the insurance industry.
According to the Kansas City Star:
"Insurance companies have far deeper pockets, and far greater political pull, than consumers might ever dream of -- and their influence is considerable. The reason is simple. Big money is at stake. Insurance premiums now equal roughly 10 percent of the U.S. gross domestic product."
Doug Heller, director of the Foundation for Taxpayer and Consumer Rights, a non-profit California advocacy group was quoted
"The industry (insurance) gets what it wants across the country"
The Star goes on to note that the insurance industry boasts of assets of $5.6 Trillion, and has virtually no federal oversight. In 39 states, the insurance commissioners are appointed, not elected and thus appointed from the industry they are supposedly trying to police. The Star found that insurance companies invest millions of dollars attempting to influence regulators and lawmakers, spending $119 million lobbying federal officials in 2005. The insurance industry also ranks in the top 10 of campaign contributors, accounting for $230 million since 1999.
These contributions are paying off. In Missouri, insurance interests contributed $1 million to Kansas lawmakers during the last 10 years and $4 million to Missouri lawmakers. These same lawmakers passed legislation limiting medical malpractice lawsuits and restricted the public's right to insurance complaints during the same period. New York State Senator James Seward, chairman of the insurance committee has received $500,000 in campaign contributions from insurance interests. He has sponsored legislation giving insurers tax credits, simplified methods to reorganize their corporate structure and a proposal that would weaken state oversight of auto insurance rates. Insurers in California gave former California Insurance Commissioner Chuck Quackenbush free TV commercials and made donations to charities that included his son's football camp following his action that allowed insurers to escape investigations and fines for underpaying policyholders following a major earthquake.
John Oxendine, Georgia's elected insurance commissioner was quoted as saying:
"you wonder if you get a little bit of the fox guarding the henhouse", when speaking of the cozy relationship between insurance regulators and the industry they regulate.
In fact, it appears that some in the industry are becoming more brash and aggressive about using campaign donations as a weapon. According to California Commissioner John Garamendi, he asked the FBI to investigate after he said that insurers threatened to spend $2.4 million against his campaign for lieutenant governor if he outlawed the use of home ZIP codes in setting auto insurance rates.
Incredibly, and despite ever increasing premiums and soaring insurance profits, the industry continually lobbies for more under the pretext of "tort reform" as a measure to reduce insurance premiums to the consumer. The problem is that more often than not, once the so called reform laws are passed, the insurance industry finds another excuse to raise rates again. The truth of the matter is that this country needs Insurance Reform, not Tort Reform.