Candidates Make Last Pitch for Commissioner’s Office

While John Garamendi and Gary Mendoza figure to be the front-runners in the race for California Insurance Commissioner, they are not the only candidates on the ballot. Recently, Insurance Journal offered the three other candidates an opportunity to address issues in the race and note what they would do as the next Commissioner. Below are the thoughts of Dale Ogden (Libertarian Party) and David Sheidlower (Green Party). Raul Calderon (Natural Law Party) was also asked to respond.

Insurance Journal: What would be your top priority if elected?

Ogden: First, do no harm! There has been too much micro-management in insurance regulation. Let the insurance companies compete; let competition set rates. While it’s difficult to select only one goal, one of my main goals would be to cut the insurance department budget by $100 million, from its current level of more than $150 million. It was only $28 million in 1988. I would also reform the Conservation and Liquidation Bureau and focus the remaining resources of the Department on solvency regulation.

Sheidlower: My top priority would be to establish a culture of customer service and consumer advocacy at the Department of Insurance. I would also immediately address the crisis in the workers’ comp industry.

Insurance Journal: What solution or solutions would you have to the workers’ comp situation?

Ogden: California has some of the lowest benefits for injured workers in the United States yet it is one of the highest cost systems in the country, due to the high overhead of the system. This overhead comes from: (1) the unnecessary involvement of plaintiff lawyers in what is supposed to be a no-fault system; (2) high (and rapidly growing) medical costs without accountability (and often outright fraud by a small minority of medical service providers); and (3) fraud by workers. The Insurance Commissioner cannot solve these problems alone, but can help the public (and maybe the legislature, if they are interested) better understand the sources of the costs and propose solutions. Those solutions may involve getting the public directly involved through ballot initiatives. One thing is certain, artificially depressing rates or allowing the State Fund (or private carriers) to low-ball rates is not the solution. A favorable regulatory climate would ease the problem and more private insurance companies might be willing to underwrite more workers’ compensation in California.

Sheidlower: As I’ve argued in other publications, the medical component of the workers’ comp market is essentially flawed because what is purchased: services is not an adequate proxy for what is required: the restoration of function. Only by re-focusing the industry on measuring functional health status and using those measures in the reimbursement mechanism can we have a long-term solution for the industry.

Insurance Journal: How much of a problem is mold as it relates to the homeowners market?

Ogden: Mold is a problem for the homeowners’ market only if insurers are forced to cover it. Mold claims are a relatively new and potentially costly discovery by the plaintiff’s bar. As with many such potential windfalls for plaintiff attorneys, it is difficult to determine whether the presence of mold has anything to do with someone’s illness and therefore, each case brought before a jury is another roll of the dice. Since case law is developing and no one yet knows how much it will cost to cover mold, insurance companies want to exclude coverage until and unless they can quantify the cost and charge accordingly. In the meantime, most of us are better off without mold coverage. The lack of coverage will eliminate much of the incentive for the plaintiff’s bar to pursue mold claims. In Texas, for example, some insurance companies have completely ceased writing homeowners coverage because of mold coverage; the same thing could happen here and we’d all be hurt by the decrease in competition.

Sheidlower: Mold is a tremendous problem. But like lead in paint and asbestos in ceilings, it should not be addressed solely as a problem for the insurance industry. It is a public health issue, a building code and inspection issue AND an insurance issue.

Insurance Journal: How important is the role of California’s Insurance Commissioner both nationally and on a global basis?

Ogden: As a large market for insurance, the California Insurance Commissioner should be a significant influence nationally and internationally. Unfortunately, with the two elected insurance commissioners we’ve had so far, California has become an international joke. In several national and international forums with which I am familiar, the characteristics most often exhibited by our elected insurance commissioners (and their chief political appointees) were arrogance and incompetence. As California Insurance Commissioner, I would become a force for reform within the National Association of Insurance Commissioners.

Sheidlower: The California insurance market is large and, with the exception of disaster coverage which should be regionalized, self-contained. Innovations in workers’ comp and long-term care coverage could revolutionize those practices worldwide.

Insurance Journal: What message would you have for independent agents?

Ogden: I would let you alone to run your lives and your businesses as you choose. Government should not interfere in the economy. The legitimate purpose of government is to protect our rights to life, liberty, property, the pursuit of happiness, to defend our borders, and to protect and respect private property rights (such as enforcing contracts). We do not need them telling us how to run our lives.

Sheidlower: Add value to the product(s) you sell. First, honestly present to customers what a policy does and does not offer. Second, insist that the industry give the customer a fair shake and deliver on its promises.

Topics California Legislation Workers' Compensation