An important piece of your life is about to be determined by a brand new state committee that has received very little attention so far.
The Insurance Nominating Committee was created by legislation to appoint the Superintendent of Insurance, who will head a department which, as of July 1, will no longer be a division of the Public Regulation Commission.
Every one of us, every which way you look, is a captive customer of the insurance industry, and therefore of regulations written and decisions made by this department. Let's hope this committee gives us an honorable and committed superintendent, as free of political influence as it's possible to be in our system.
The change was partly the brainchild of an influential think tank called Think New Mexico, which now writes on its website that the office "balances the interests of insurance businesses and consumers and insulates insurance regulation from political interference."
Is it possible to use the political system to create an office that will be free of politics? In New Mexico? The legislation attempts to do that. Four members of the nine-member committee are appointed by the governor, four by the Legislative Council (the political parties must be balanced), and the ninth by agreement of the eight. Half of the eight appointees must be from the insurance industry, and the other half must represent consumers. As the legislation reads, the committee is supposed to appoint a superintendent and then disappear until the job becomes vacant again.
The Governor's Office and the Legislative Council recently announced their appointments to the panel. Now the work starts.
The law says the superintendent, once appointed, can be fired only for "incompetence, willful neglect of duty or malfeasance in office," and only by the committee. Superficially, that looks pretty good. It creates a buffer between the Superintendent and both the governor and the legislative leadership. We hope that means that neither the governor nor the legislative leadership can exert undue pressure.
We are not concerned with only the current governor or this legislative leadership. A new structure has been created. The incoming superintendent's term will expire at the end of 2015; after that, the law establishes four-year terms. The committee's first term ends on June 30, 2015; a new committee will have to be named after the 2014 election, to appoint a new superintendent or reappoint one. All kinds of political dynamics are possible.
The temptations to rejigger insurance regulation are manifold. We've heard about some improprieties, and more have been rumored in political circles.
Years ago I heard a story from a friend in the industry Ð unproven but credible Ð about pressure applied to an insurance company by a department employee to pay a possibly bogus claim for a politically connected individual. I emphasize that the story is old and the employee who allegedly did this is long gone. It's not hard to imagine similar pressures, not only for claims but for rulings about rates. Big dollars are involved Ð your dollars and mine. Honorable public servants at every level resist such temptations every day.
New Mexico needs an insurance superintendent who understands the industry but is not in its pocket. We need a superintendent who will go after bad guys, no matter which side of the system they're on Ð insurance companies, agents, adjusters, lawyers, and Ð yes Ð consumers and who knows how to split the difference in approving rates and setting regulatory policies Ð reasonable for the insurance companies, fair and understandable for consumers.
This is not an unrealistic ideal; though the details are specific to this industry, it's the level of excellence New Mexicans have the right to expect of every department head.
Merilee Dannemann is an independent public policy professional in Albuquerque. Contact Merilee Dannemann through www.triplespacedagain.com.